New York Stock Exchange (NYSE)
The History of the New York Stock Exchange
Although the name, as it stands today, was not official until 1863 the NYSE really had its beginning in May of 1792. On the 17th of that month, the Buttonwood Agreement was reached and signed by 24 stockbrokers. The name came from the tree, located at 68 Wall Street, that they gathered under regularly. The first NYSE constitution was drafted in March of 1817, and the organization then got its first official name - the New York Stock & Exchange Board - shortened in 1863 to the NYSE.
Types of Financial Instruments Traded on the NYSE
Stocks
The major trading today is in stocks. The stocks all have a symbol that is recognized as the symbol for the company. The Exchange includes stocks from large and medium-sized businesses. It would be difficult for small businesses to reach the level of the NYSE - a prestigious position for a business to achieve.
Bonds
Bonds come in several categories. There are bonds issued by corporations and there are municipal bonds issued by government entities. All bonds have a face value and that face value is what is used to calculate interest. The money paid for a bond is not necessarily equal to the face value - it may be lower or higher.
Indexes
There are many indexes that are "tradable" on the NYSE. Some indexes are created on stocks, some bonds, and some other equities. There are even indexes on an index. These are traded on the NYSE and have a symbol much the same as stocks. There are also many ETFs - Exchange Traded Funds - listed and traded on the NYSE Arca branch of the NYSE.
Commodities
Although the NYSE does not trade physical commodities, there are indexes traded on the NYSE that are concerned solely with commodities. These are traded with a symbol on the NYSE Arca branch of the NYSE.
Notable Corporations Listed on the Exchange
Corporations that achieve a listing on the NYSE must be a strong corporation and meet the stringent requirements of the Exchange. There are over 2800 companies listed on the NYSE, but the top level is reported by Dow Jones in its Dow Jones Industrial Average - DJIA. The following five stocks are included in the DJIA and carry the highest weight in the DJIA.
1. International Business Machines – IBM
IBM carries a weight of 75 percent on the DJIA and is a computer services corporation. The three-month daily trading average for the stock approaches 5.8 million shares. Presently trading just under $185 a share, it is a popular stock.
2. Exxon Mobil Corporation – XOM
The weight placed on this stock is 69 percent. The corporation deals in the exploration and production of oil and gas and related services. The average daily trading volume for the last three months was around 22.5 million shares. It is presently trading around $85 a share.
3. Chevron Corporation – CVX
Chevron has a dual enterprise in the oil and gas industry. Its upstream activities include the exploration and transporting of the products and the downstream involves refining the product and getting it to the consumer. It presently trades at around $107, with a three-month daily trading average of around 9.8 million shares. Its dividend is not the highest in the industry, but is around three percent.
NYSE Influence on Finances Worldwide
The influence of the NYSE on world finance does not stop with the central NYSE, it has branched out into its NYSE Euronext market with five market places worldwide including New York, Paris, Lisbon, Brussels and Amsterdam. NYSE Euronext handles over 40 percent of trading in world equities. It lists over 950 companies with capitalization above 2.2 billion Euro. The NYSE Euronext is a well-regulated market and is capable of managing many crisis situations and unusual financial circumstances.
Deutsche Boerse AG, that operates the Frankfurt exchange, is offering $10 billion for the NYSE Euronext and its exchanges. This will create the largest stock exchange in the world and is opposed by the London Stock Exchange and NASDAQ. Investors fear that the influence will be too widespread with this merger.
New York's Financial Industry
The financial industry in New York is centralized in southern Manhattan and is sometimes referred to as FiDi. The corner of Wall Street and Broadstreet, just off William Street, is considered the heart of New York's Financial District and is home to a large number of the city's financial institutions.