The New York Stock Exchange (NYSE), operated by the Intercontinental Exchange, is the worldโs largest stock exchange. Established in 1792, it has a market capitalization of $25.56 trillion as of December 2023. Its inaugural trade was believed to involve the Bank of New York, now part of Bank of New York Mellon. The tradition of ringing the NYSE bell at market open and close has become a regular feature in modern media.
The NYSE operates amidst intense competition today, striving to list various financial products. These products include cash equities, exchange-traded funds (ETFs), structured products, futures, options, and derivatives.
As a continuous auction floor trading exchange, the NYSE sees specialists and brokers as key participants. Brokers execute โbuy and sellโ orders on behalf of clients or their firms. On the other hand, specialists manage specific stocks by accepting orders and overseeing auctions. Specialists also ensure market liquidity by occasionally deploying firm capital to maintain active trading.
Through collaboration, specialists and brokers maintain an efficient trading system that offers investors competitive rates based on supply and demand. Read this article to learn how many companies are listed in U.S. stock market. We will also review its rich history, unique auction market dynamics, and regulatory responsibilities.
The Story of the New York Stock Exchange
The New York Stock Exchange (NYSE), or โThe Big Board,โ symbolizes American finance in Lower Manhattan, New York City. As the largest stock exchange globally by market capitalization, the NYSE is a pivotal institution in global finance.
Located at 11 Wall Street and 18 Broad Street, the NYSEโs historic trading floor is a designated National Historic Landmark, underscoring its enduring significance. It is owned by the Intercontinental Exchange (ICE) and listed under the ticker symbol ICE. The NYSE evolved from integrating into NYSE Euronext in 2007, linking with the European exchange Euronext.
Investing in the stock market is integral to American financial life. According to Gallup, approximately 61% of adults participating in stocks, mutual funds, or retirement accounts as of 2023. The NYSE continues to innovate, maintaining its historical importance while adapting to modern financial demands.
The NYSE represents the intertwined fortunes of individuals and enterprises, embodying a dynamic future in the global financial landscape.
How Many Stocks are Listed on the NYSE and NASDAQ
When people talk of the stock market, they usually think of the New York Stock Exchange (NYSE) or the Nasdaq. There is no debate about why. These two exchanges account for most stock trading in North America and overseas.
The NYSE and Nasdaq operate differently and list different types of securities. Knowing these differences can help you better understand the operation of a stock exchange and the mechanics of buying and selling stock.
The New York Stock Exchange (NYSE) and the NASDAQ are two of the worldโs largest and most well-known stock exchanges. Each caters to companies of varying sizes and financial health. While the NYSE is often associated with more established companies due to its higher financial thresholds, the NASDAQ is renowned for being more accessible to younger, higher-growth companies.
As of 2024, the NYSE lists over 2,400 companies, while the NASDAQ hosts over 3,500 listings, reflecting their distinct roles and the variety of businesses they attract. Each exchange offers unique advantages and meets different needs within the financial market, underscoring the importance of both platforms in the global economic landscape.
As the second-largest stock exchange globally, the NASDAQ boasts a market capitalization of $18 trillion for its listed companies. In contrast, the NYSE holds the title of the largest stock exchange worldwide, with a market capitalization of $25.48 trillion for its listed companies.
The Evolution of the NYSE
Since its inception in 1792, the NYSE has been at the forefront of global finance. The exchange was established when 24 stockbrokers signed the Buttonwood Agreement, laying the foundation for organized securities trading in the United States. Over the years, the NYSE has evolved and expanded, maintaining its reputation as a premier venue for equity trading.
Transition to NYSE Pillar
The NYSE Group operates several markets and has been transitioning all of them to a new, cutting-edge, integrated trading platform called NYSE Pillar over the past two years. This platform allows clients to connect to all NYSE markets using a single specification, reducing complexity and improving consistency, performance, and resiliency.
Two NYSE Groupโs exchanges, NYSE Arca (the largest ETF market) and NYSE American (focused on small to mid-cap firms), have already converted to the NYSE Pillar platform.
NYSE American, geared towards younger, high-growth companies, is a prominent market for small-cap firms. It utilizes electronic designated market makers to enhance market liquidity and operates on a fully integrated trading platform that facilitates efficient order matching.
On April 9, the NYSE launched the first step of switching to the NYSE Pillar platform, enabling the support of trading in a wider range of securities. This includes all 8,000 securities listed on U.S. stock exchanges. Securities listed on other U.S. securities exchanges will now be traded on the NYSEโs Pillar platform. NYSE-listed securities will continue to trade on their present platform until their scheduled migration to the NYSE Pillar shortly.
NYSE Unique Market Model
Most stock markets today are entirely electronic. The NYSE is unique because it uses a hybrid paradigm combining high-tech technology with human judgment from the trading floor. This combination promotes leading liquidity and, more significantly, market stability, as assessed by price volatility relative to other venues.
The NYSE is also the only major worldwide exchange with an active trading floor, allowing live trading at the point of sale.
NYSE Floor Brokers
NYSE trading floor brokers work on an agency-only basis, which means they execute buy and sell orders on behalf of clients and are not proprietary traders. Historically, floor brokers at the NYSE had significant freedom and flexibility when manually displaying client orders on the trading floor. Today, the NYSE combines current electronic trading with human judgment and assessment, and it provides electronic exchange tools that let floor brokers fulfill their conventional agency functions in todayโs fast-paced markets.
With this expansion, NYSE floor brokers can now give their clients the capacity to trade in all US securities. This lets them reap further benefits from the NYSEโs unique market architecture.
The Role of Designated Market Makers
The NYSE is unique among stock exchanges providing Designated Market Makers (DMMs). DMMs have special obligations and responsibilities to ensure fair and orderly trading in their portfolio of equities.
When a company is listed on the NYSE, they select one of the five DMM firms. The DMM plays a crucial role in a companyโs initial public offering (IPO) by determining the appropriate opening auction price when the company begins trading as a publicly traded corporation. After IPO day, the DMMโs commitments result in tighter spreads, lower volatility, and increased liquidity in the assigned companies. Additionally, enterprises can be assured that their DMM is present at the point of sale, closely monitoring the market throughout the trading day.
This high-tech/high-touch strategy implies that NYSE-listed companies benefit from improved market quality across various metrics, including lower volatility and narrower spreads. Companies not listed on the NYSE do not benefit from a DMM.
This unique blend of high technology and high touch provides global markets with transparency, liquidity, and confidence.
Regulatory Oversight and Market Regulation
Market regulation, overseen by the Securities and Exchange Commission (SEC), is crucial in ensuring the fair and orderly trading of the extensive range of stocks listed on the NYSE. The SECโs oversight includes enforcing rules that promote transparency, protect investorsโ interests, and maintain the marketโs integrity. This section explores how regulatory frameworks influence trading practices on the NYSE, emphasizing the SECโs role in maintaining market stability and investor confidence.
Trading at the NYSE runs continuously from market open to close. Before the official opening at 9:30 a.m. Eastern time (ET), participants can place buy and sell orders starting at 6:30 a.m. ET. These orders are matched, pairing the highest bid price with the lowest ask price. For the closing auction, orders are accepted until 3:50 p.m. ET, with a window for cancellations until 3:58 p.m. ET.
Auction Market Dynamics at the NYSE
The NYSE operates as an auction market where market participants directly buy and sell from each other. This method fosters a competitive environment where buyers and sellers submit bids and offers simultaneously. Stock trades on the NYSE are executed based on matching the highest bidding price with the lowest asking price, ensuring transparency and fair market pricing through competitive interaction among participants.
Responsibilities of Listing Venues
While stocks can trade on multiple markets, the listing venue has distinct responsibilities:
- Provide a Well-Regulated Market: NYSE Regulation protects investors and the public interest by overseeing regulatory responsibilities.
- Establish Displayed Prices: The NYSEโs unique market model offers deep liquidity and high-quality quotes, which help reduce volatility and lower the cost of capital for issuers.
- Price Discovery During Opening and Closing Auctions: The NYSEโs unique auction process, featuring Designated Market Makers, facilitates superior price discovery.
- Evaluating market quality cannot be reduced to a single metric. Corporate issuers should consider various factors when assessing performance, such as liquidity, the tightness of the bid-ask spread, and the duration and size of quotes at the best prices, among other criteria.
This was everything you needed to know about the stocks being traded on the NYSE. We hope you found this guide helpful!