New York Stock Exchange

The New York Stock Exchange (NYSE) is an American stock exchange located in Lower Manhattan, New York City, and is the largest by market capitalization. The NYSE has a rich history dating back to 1792 with the Buttonwood Agreement, and it has undergone numerous changes and reforms over time.

Historical Milestones

The NYSE’s journey began under the Buttonwood Agreement in 1792, marking its formation. The invention of the electrical telegraph helped consolidate markets, leading to the NYSE’s dominance. In 1869, the Open Board of Stock Brokers merged with the NYSE, increasing its membership and trading volume.

The NYSE experienced significant growth during the late nineteenth and early twentieth centuries but was also hit by panics and crashes. Notable events include the closure during World War I (1914), the Wall Street bombing in 1920, and the Black Thursday crash of 1929 followed by Black Tuesday.

On April 21, 2005, NYSE announced plans to merge with Archipelago, leading to its transformation into a for-profit public company. The NYSE Group merged with Euronext in 2007 to form NYSE Euronext. Wall Street remains the US’s leading money center for international financial activities and wholesale services.

Notable Events

The NYSE has faced several significant events, including:

• Closure during World War I (1914) and re-opening for bond trading
• The Wall Street bombing in 1920
• The Black Thursday crash of 1929 and Black Tuesday sell-off panic
• Registration as a national securities exchange with the SEC in 1934
• Abbie Hoffman’s Yippie movement stunt in 1967
• The Dow Jones Industrial Average drop of 508 points on October 19, 1987 (Black Monday) followed by Terrible Tuesday and the Mini-Crash of 1989 due to UAL deal breakdown.
• Asian Financial Crisis led to a 1997 Mini-Crash but Dow recovered quickly
• A January 26, 2000 altercation with Rage Against Machine caused doors to be closed and the band escorted from site
• NYSE was closed for four trading sessions following September 11 attacks, losing $1.4 trillion in value
• 2010 Flash Crash occurred on May 6, causing a 998-point loss before rebounding
• NYSE was shut down for two days due to Hurricane Sandy on October 29, 2012
• SEC fined the NYSE $4.5 million for market rule violations on May 1, 2014
• Berkshire Hathaway’s A Class shares hit $200,000 a share on August 14, 2014
• Technical issues affected trading on July 8, 2015 but were not caused by cyber breach. On May 25, 2018, Stacey Cunningham became the first female president of the NYSE, succeeding Thomas Farley.
• In March 2020, the NYSE moved to all-electronic trading due to the COVID-19 pandemic and reopened on May 26, 2020.

Structure and Operations

The main NYSE Building was designed in the Beaux Arts style by George B. Post and completed in 1903 at 18 Broad Street. The exchange is closed on several holidays and averages around 253 trading days per year.

The NYSE provides a platform for buying and selling shares of stock, operating in a continuous auction format with specialists acting as auctioneers. Trading can be done electronically or through the floor, with electronic trading becoming more prevalent over time. The exchange has implemented measures to manage risk in electronic trading, including circuit breakers and liquidity replenishment points.

The NYSE trades Monday-Friday from 9:30 am-4:00 pm ET, except for holidays declared by the Exchange. Proposals for round-the-clock trading have been considered but remain unimplemented. A Level 3 decline results in trading being suspended for the remainder of the day.

The biggest one-day decline in the S&P 500 since 1987 was the 11.98% drop on March 16, 2020.

Membership and Trading Rights

Until 2005, NYSE members held ‘seats’ that granted them direct trading rights, with prices varying widely over the years. In 2005, seat owners received $500,000 in cash and shares for their seats. Today, licenses to trade directly on the exchange cost $40,000 and $1,000 respectively.

Indices and Records

The NYSE Composite Index was created in the mid-1960s with a base value of 50 points. It was later set at 5,000 points in 2003. The index’s close at the end of 2013 was 10,400.

Notable records include:

• The NYSE Composite Index relaunched with a value of 5,000 points in 2003
• NYSE Euronext completed the acquisition of the American Stock Exchange for $260 million in stock on October 2008
• On February 1, 2012, the European Commission blocked the merger of NYSE with Deutsche Börse.

Bell-Ringing Tradition

The NYSE’s opening and closing bells mark the start and end of each trading day. The main bell is rung at 9:30 am ET and controlled by a green button, while the orange button activates a single-stroke bell for a moment of silence. A red button controls a backup bell in case the main bell fails to ring.

Celebrities and business executives often ring the bells to announce new products or events, with notable bell-ringers including former US Presidents, athletes, entertainers, and public figures. Fictional characters have also rung the bell, including Mickey Mouse and Darth Vader.

The NYSE’s journey is a testament to its resilience and adaptability. From the Buttonwood Agreement in 1792 to the digital transformation of today, the NYSE has played a pivotal role in shaping the American economy. As it continues to evolve, the NYSE remains at the heart of global financial markets, serving as a symbol of economic strength and innovation.