New York Stock Exchange (NYSE): Definition, How It Works, History (2024)

What Is the New York Stock Exchange (NYSE)?

The New York Stock Exchange (NYSE) is a stock exchange located in New York City that is the largest equities-based exchange in the world, based on the total market capitalization of its listed securities.

Formerly run as a private organization, the NYSE became a public entity on March 8, 2006, following the acquisition of electronic trading exchange Archipelago. In 2007, a merger with Euronext—the largest stock exchange in Europe—led to the creation of NYSE Euronext, which was later acquired by Intercontinental Exchange, Inc. (ICE), the current parent of the New York Stock Exchange.

Key Takeaways

  • The New York Stock Exchange (NYSE), which dates back to 1792, is the largest stock exchange in the world based on the total market capitalization of its listed securities.
  • It was the first formalized stock exchange established in the United States.
  • Many of the oldest publicly traded U.S. companies are listed on the "Big Board," the nickname for the NYSE.
  • The Intercontinental Exchange (ICE) now owns the NYSE, having purchased the exchange in 2013.

Understanding the New York Stock Exchange (NYSE)

Located on Wall Street in New York City, the New York Stock Exchange—also known as the "Big Board"— consists of one trading floor for equities and another for the NYSE American options exchange. The main building located at 18 Broad St. and the one at 11 Wall St. were both designated historical landmarks in 1978.

The NYSE relied for many years on floor trading only, using the open outcry system. Many NYSE trades have transitioned to electronic systems relying mainly on designated market makers to conduct both the physical and automated auctions. Quotes offered by DMMs are on par with what floor traders and other market participants offer.

Currently, the NYSE is open for trading Monday through Friday from 9:30 a.m. to 4:00 p.m. ET. The stock exchange is closed on certain U.S. holidays. When these fall on a Saturday, the NYSE is sometimes closed the preceding Friday. When holidays fall on a Sunday, the NYSE may be closed the following Monday.

The NYSE is the world's largest stock exchange by total market capitalization of listed companies, which is estimated to be $24.6 trillion as of Mid-2022.

The NYSE's Opening and Closing Bells

The opening and closing bells of the exchange mark the beginning and end of the trading day. The opening bell is rung at 9:30 a.m. ET, andthe closing bell is rung at 4:00 p.m. ET, closing trading for the day. But trading days did not always begin and end with a bell—the original signal was actually a gavel. During the late 1800s, the NYSE changed the gavel to a gong. The bell became the official signal for the exchange in 1903 when the NYSE moved to 18 Broad St.

Prior to 1995, the exchange's floor managers rang the bells. But the NYSE began inviting company executives to ring the opening and closing bells on a regular basis, which later became a daily event. The executives are from companies listed on the exchange, who sometimes coordinate their appearances with marketing events, such as the launch of a new product or innovation, or a merger or acquisition.

Sometimes, other public figures, such as athletes and celebrities, ring the bell. Some of the more notable figures to ring it include singer/actor Liza Minnelli, Olympic medalist Michael Phelps,and rapper Snoop Dogg. In July 2013, United Nations Secretary Ban Ki-moon rang the closing bell to mark the NYSE joining the U.N. Sustainable Stock Exchanges Initiative.

The New York Stock Exchange passed the milestone of one million shares traded in a single day in 1888. By 2022, more than five billion shares were changing hands on the NYSE during a normal business day.

History of the NYSE

The New York Stock Exchange dates back to May 17, 1792. On that day, 24 stockbrokers from New York City signed the Buttonwood Agreement at 68 Wall St. The New York Stock Exchange kicked off with five securities, which included three government bonds and two bank stocks.

Thanks to the NYSE's head start as the major U.S. stock exchange, many of the oldest publicly traded companies are on the exchange. Consolidated Edison (ED) is the longest-listed NYSE stock, joining in 1824 as the New York Gas Light Company. Along with American stocks, foreign-based corporations can also list their shares on the NYSE if they adhere to certain listing standards.

A series of mergers hasgiven the New York Stock Exchange its massive size and global presence. The company started as NYSE before merging with the Euronext and adding the American Stock Exchange. NYSE Euronext was purchased in an $11 billion deal by the Intercontinental Exchange (ICE) in 2013. The following year, Euronext emerged from ICE via an initial public offering (IPO), but ICE retained ownership of the NYSE.

A Few Notable Dates in the NYSE’s History

  • Oct. 24, 1929: The most devastating stock market crash in the history of the U.S. began on Black Thursday and continued into a sell-off panic on Black Tuesday, Oct. 29. It followed the crash of the London Stock Exchange, which took place in September and signaled the onset of the Great Depression, which affected all of the industrialized countries in the West.
  • Oct. 1, 1934: The NYSE registered as a national securities exchange with theSEC.
  • Oct. 19, 1987: The Dow Jones Industrial Average (DJIA) dropped 508 points or a loss of 22.6% in a single day.
  • Sept. 11, 2001: Trading was shut down for four days at the NYSE following the 9/11 attacks and resumed on Sept. 17.About $1.4 trillion was lost in the five days of trading following the reopening—the biggest losses in NYSE history.
  • October 2008: NYSE Euronext completed the acquisition of the American Stock Exchange for $260 million in stock.
  • May 6, 2010: The DJIA suffered its largest intraday drop since the crash of Oct. 19, 1987. It dropped 998 points in what is known as the 2010 Flash Crash.
  • Dec. 20, 2012: ICE proposed to buy NYSE Euronext in a stock swap worth $8 billion.
  • May 1, 2014: The NYSE was fined $4.5 million by the Securities and Exchange Commission in order to settle charges of market rule violations.
  • May 25, 2018: Stacey Cunningham became the first female president of the NYSE.
  • March 16, 2020: The onset of COVID-19 pandemic fears led to the DJIA suffering its largest daily point drop in history as it fell 2,997.10 points from the previous close. Percentage-wise, it was the third worst day ever.
  • March 23, 2020: The NYSE temporarily closed floor trading due to the COVID-19 pandemic, opting to continue its operations electronically.
  • March 24, 2020: The DJIA recorded its largest one-day point gain on expectation of a stimulus relief bill. Percentage-wise, it was the fifth best day ever.

Who Owns the New York Stock Exchange?

The NYSE was acquired by the Intercontinental Exchange (ICE) group in 2013.

Where Is the Oldest Stock Exchange in the World?

The Amsterdam Stock Exchange (AEX) in the Netherlands is the oldest stock exchange, established in 1602 by the Dutch East India Company. Today the Amsterdam exchange is owned by Euronext.

What Is the Largest Stock Exchange in the World?

The New York Stock Exchange (NYSE) remains the largest stock exchange in the world in terms of the market capitalization of the companies listed on it. The NASDAQ ranked second, followed by the Shanghai Stock Exchange, and the Euronext.

The Bottom Line

The New York Stock Exchange (NYSE) is the oldest and most influential securities exchange in the United States, and is the largest stock exchange in the world by total listed company market cap. With humble beginnings under a buttonwood tree in Manhattan, the NYSE is now a landmark that epitomizes Wall Street. Today, the NYSE lists the most important publicly-traded American companies and is still seen as the premier venue for stock trading.

New York Stock Exchange (NYSE): Definition, How It Works, History (2024)


New York Stock Exchange (NYSE): Definition, How It Works, History? ›

The New York Stock Exchange (or NYSE) is the largest stock exchange in the world. Think of it as an organized, fast-paced flea market where buyers and sellers from all over the world come to trade U.S. stocks (and now some foreign shares as well).

How does the New York Stock Exchange NYSE work? ›

The NYSE is a stock exchange where the equity shares of public companies are bought and sold. The NYSE uses an auction-based system in which brokers auction shares of stock for the highest price they can get, either on a physical trading floor or an electronic system.

What is the New York Stock Exchange definitions? ›

The New York Stock Exchange (NYSE) is a New York City-based public marketplace for trading stock. It is the largest stock exchange in the world based on market capitalization.

What is the New York Stock Exchange brief history? ›

History of the New York Stock Exchange

In 1792, the NYSE was established at 68 Wall Street where 24 brokers and merchants outlined the rules for trading securities in the Buttonwood Agreement. The organization was initially named New York Stock & Exchange Board. It became the New York Stock Exchange in 1863.

What is the New York Stock Exchange Quizlet? ›

The New York Stock Exchange (NYSE) is a stock exchange based in New York City that is considered the largest equities-based exchange in the world, based on total market capitalization of its listed securities.

What are the benefits of the New York Stock Exchange? ›

The NYSE is the only exchange with a unique model which combines state-of-the-art technology with a human being at the point of sale — which together delivers the lowest levels of volatility and deepest pool of liquidity. During global events, turmoil and volatility, investors turn to the NYSE.

Why is the NYSE important to the US economy? ›

The stock market impacts the economy because it influences consumer confidence, which in turn influences the overall economy. The relationship also works the other way, in that economic conditions often impact stock markets.

Who owns New York Stock Exchange? ›

NYSE, NYSE MKT, and NYSE Amex Options are today owned by the Intercontinental Exchange. Intercontinental Exchange (NYSE:ICE) operates the leading network of regulated exchanges and clearing houses.

What is the mission of the NYSE? ›

The mission of the New York Stock Exchange is to improve the value of strategies used in raising capital and management of assets by ensuring effectiveness and high quality market places for the financial instrument markets. Yes, the NYSE mission is still what today's market needs.

What is stock market in simple words? ›

Definition: It is a place where shares of pubic listed companies are traded. The primary market is where companies float shares to the general public in an initial public offering (IPO) to raise capital.

What best describes the purpose of a stock exchange? ›

A stock exchange helps companies raise capital or money by issuing equity shares to be sold to investors. The companies invest those funds back into their business, and investors, ideally, profit from their investment in those companies.

What is New York Stock Exchange better known as? ›

Trading. The New York Stock Exchange (sometimes referred to as "The Big Board") provides a means for buyers and sellers to trade shares of stock in companies registered for public trading.

What is the reason the New York Stock Exchange began to trade mostly stocks? ›

By the 1840s, canal companies were replaced with railroad construction, which was almost entirely funded by the sale of stock. It was during the railroad boom that the NYSE transitioned from being centered around bond trading to being mostly focused on the buying and selling of stock.

What is the New York Stock Exchange short definition? ›

The New York Stock Exchange (NYSE) is a stock exchange located in New York City that is the largest equities-based exchange in the world, based on the total market capitalization of its listed securities.

How does New York Stock Exchange work? ›

The New York Stock Exchange has two primary functions: It provides a central marketplace for investors to buy and sell stock. It enables companies to list their shares and raise capital from interested investors.

What does the New York Stock Exchange offer? ›

Trading Equities, Options, ETFs & Bonds.

How does NYSE calculate stock price? ›

Once a company goes public and its shares start trading on a stock exchange, its share price is determined by supply and demand in the market. If there is a high demand for its shares, the price will increase. If the company's future growth potential looks dubious, sellers of the stock can drive down its price.

Can you buy stocks directly from NYSE? ›

To buy stocks, you'll typically need the assistance of a stockbroker since you cannot simply call up a stock exchange and ask to buy stocks directly. When you use a stockbroker, whether a human being or an online platform, you can choose the investment that you wish to buy or sell and how the trade should be handled.

How are stocks sold on the NYSE? ›

Floor Brokers

They act as agents, buying and selling stock for the public (institutions, hedge funds, broker/dealers). Floor brokers are physically present on the trading floor and are active participants during NYSE's opening and closing auctions, as well as throughout the trading day.

How does the NYSE trading floor work? ›

The traders buy/sell securities on the trading floors, via a virtual trading floor, or through telephone, the internet, and other methods. There is a particular method that traders follow on the trading floor. It is called the open outcry method. Under this method, the traders offer hand gestures to attract attention.

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