Posts Tagged ‘NYSE’

Anti-Trust Cops Anti-Nasdaq/NYSE Takeover

Tuesday, May 17th, 2011

policia.jpeg
(photo credit: banspy)

What happens when the two largest stock exchanges in the U.S. become one big mega-exchange? A monopoly, that’s what! In case you don’t remember from history or economics class (or the game Monopoly), a monopoly is when one company controls an entire market, making it hard or impossible for smaller companies to fairly compete. (The market, in this case, being the market of stock markets.)

That’s why anti-trust regulators at the Justice Department have shut down Nasdaq’s attempted hostile takeover of the New York Stock Exchange. The takeover is hostile because the NYSE already has a deal with German bank Deutsche Borse to be acquired for $10 billion, and it’s so not interested in starting a relationship with Nasdaq right now.

The New York Stock Exchange and Nasdaq have been competing for years, which keeps them both in customer-pleasing, price-cutting mode. Without that competition, NYSEasdaq could charge whatever it wanted and still crush what little competition would be left.

It could even become… too big to fail!

The NYSE Is Worth Less (and More) Than You Think…

Thursday, February 24th, 2011

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(credit: jarapet)

How a marriage of two stock exchanges illustrates the modern revolution in stock trading.

  • The New York Stock Exchange – famed hall of capitalist drama – has just been acquired by a German company called Deutsche Boerse. The result will be a giant international company with stock exchanges in Lisbon, Paris, Amsterdam, Brussels, New York and Frankfurt.
  • The way people trade stocks has totally transformed as technology has changed. Most trades these days are executed by computers with almost no human involvement. Since computers are smaller and cheaper than human traders, it’s possible for more small exchanges to exist, and that means more competition for giants like the NYSE.
  • The NYSE still operates a real trading floor with real people, making it ancient by today’s standards. Fewer companies are bothering to even get listed on the NYSE. This merger is an attempt by the exchange to stay competitive in an increasingly crowded industry.
  • Still, the trading floor, the opening bell, and that building on Wall Street are worth something. In fact, according to the latest valuation, they’re worth about $10 billion.

Facts & Figures

  • The NYSE has been on Wall Street since 1792, when 24 merchants traded stocks under a buttonwood tree (you know, back when there were trees on Wall St.)
  • The new company formed by the merger will be 60% owned by Deutsche Boerse
  • High-frequency trading (a.k.a. computer trading) accounts for about 70% of all daily trades

Best Quote

“The exchange business is really a computer business these days.” – Charles Jones, Professor at Columbia Business School, former visiting economist at the NYSE

What do you think?

Did you know that stock exchanges like the NYSE are themselves publicly-traded, for-profit companies?

How much does a name brand influence your decision to buy (or invest)?

Get to it!

Thinking about investing in stocks? Take our Risk Assessment Quiz to see how much equity you can handle.

How do they choose who rings the bell at the NYSE/NASDAQ?

Friday, June 18th, 2010

The first way to answer this question is to address the “they.” The New York Stock Exchange and the NASDAQ are two separate entities, though both are stock markets and both are headquartered in New York City. On both exchanges, “opening” and “closing” bells are rung to signal the beginning and end of each trading day. The trading day starts at 9:30am EST and ends at 4:00pm EST.

The logic of who gets to ring these bells is a more interesting question. It’s basically pure public relations and promotional play to ring the opening or closing bell of the NYSE or NASDAQ. Lebron James might stop by to ring the bell because he is in New York playing with the Knicks, or it could be the CEO of Electronic Arts because his company is about to release the latest version of Rock Band. On some days, no one is scheduled to ring the opening or closing bells, and officials from the exchanges have to do the job themselves. Generally speaking, companies and individuals request to ring the bell and the individual exchanges choose who they will allow to do so.

It’s important to remember, though, that ringing the bell to start or end the trading day is a ceremony and has significance. You wouldn’t want to be remembered as the person who rang in the worst trading day of the year. On the other hand, if your company rings the bell on the opening or closing of the best trading day ever, it’s a victory for pretty much everyone!

NYSE Interview: Scott Cutler, Head of Listings

Friday, January 8th, 2010

scott-cutler.png Scott Cutler is the Head of Listings at the New York Stock Exchange, which means that when a company wants to go public and get listed on the NYSE, they’ve got to go through him first. We asked him about his work and how he got there, and Scott graciously answered.

TILE: What was your first job?
Scott: I was a paper boy!

TILE: How did you end up where you are today?
Scott: I started working as a corporate securities lawyer doing mergers and acquisitions. After that I transitioned to investment banking, working mainly with technology companies in the early days of the Internet. I joined the NYSE Euronext in April of 2006.

TILE: How does what you do affect the world at large? Why should I care about what you do?
Scott: The NYSE is one of the world’s largest financial markets and focuses on efficient trading and raising money for companies (when you buy stock or invest in a company, you are essentially giving the company money). Publicly traded companies employ over 30 million Americans and their families, that is a BIG deal! The NYSE lists over 2,000 companies in a wide variety of industries and I help manage the process of trading and raising capital.

TILE: Do you see more listings (IPOs on the NYSE) now that the economy has bottomed out?
Scott: There has been a large increase in initial public offerings, which started this past fall and will probably continue into 2010. After the crisis, the need for and ability of companies to raise money is very important.

TILE: What’s the best advice you would give to your teenage self?
Scott: Work hard at everything you do, as each step you take prepares you for another.  Life and a career is like climbing a mountain – go a little higher with each step and don’t look back.

>> TILE brings you exclusive opinions, explanations, and interviews from experts in every industry. To read more, click on Ask the Experts in the TILE Library.

Have a burning question or an expert you’d like to see interviewed? Just Ask TILE!

The NYSE is…

Monday, December 7th, 2009

The NYSE (or, the New York Stock Exchange) it is the largest and oldest stock exchange in the United States, dating all the way back to 1792. At the NYSE, the transaction of stocks are conducted on a large trading floor, where buyers and sellers agree on prices to make deals.

Why is there a stock exchange in Cleveland?

Wednesday, November 18th, 2009

All publicly traded companies can be bought and sold on one of the many stock exchanges that exist all over the country and the world, but rarely do you hear about any exchanges other than the New York Stock Exchange or NASDAQ. And wait… why do we even need more than one?

Why is there a stock exchange in Cleveland? Well, there isn’t one, but there used to be. Many of the small, regional exchanges that no longer exist were necessary because, without the Internet and computers, it wasn’t possible to buy and sell stocks quickly across vast distances. Today, huge exchanges like the NASDAQ only exist on a computer network – there is no NASDAQ trading floor.

Each different exchange only trades a limited number of companies and can impose rules on the companies it lists, or only allow companies of a certain size or stock price. The NYSE has a minimum share price and share volume so that only big companies can trade, so it’s considered a less risky exchange than say the NASDAQ which doesn’t have those types of restrictions. Exchanges can also only trade specific types of securities. The Chicago Mercantile Exchange (CME) only trades financial and commodity derivatives for example.

Being familiar with the differences between the various exchanges can help you make decisions about investing in companies traded on those exchanges and empower you to have an informed discussion of your investments with your broker or financial advisor.

NYSE Executive Lawrence Leibowitz Talks Wall Street

Tuesday, October 27th, 2009

larry-liebowitz.png Lawrence Leibowitz has one of the longest job titles you’ll hear. He’s the NYSE Euronext Group Executive Vice President & Head of U.S. Execution and Global Technology. Sound like a big job? It is. Larry kindly answered a few of TILE’s questions about what life is like on Wall Street.

TILE: So what do you do at the New York Stock Exchange?
Larry: I am responsible for running the New York Stock Exchange on a daily basis. That includes making sure our trading day runs smoothly, our technology is the best it can be, and helping the companies that list on NYSE reach investors around the world.

TILE: How has Wall Street changed since you started in the business?
Larry: In the 25 years I have been on Wall Street, the biggest change is the fact that technology has reinvented the business from top to bottom, from executing trades in less than an eyeblink, to running financial models to value complex derivatives. It has changed the business, and it has changed the way we think about the world.

The second biggest change is probably the democratization of Wall Street – in 1980 retail trading customers got most of their information from brokers, placed orders by phone, and read the newspaper to see how their portfolios were performing. Now, people get information from the web and 24 hour news coverage of the markets, place trades directly, and manage their money online.

Finally, Wall Street has gone global. As technology, information, and capital flows have interconnected our world, Wall Street firms and investors have turned their attention from the narrow U.S.-centric view to one which spans countries and continents.

TILE: What do you see in the future of the NYSE?
Larry: NYSE is now part of a larger company, NYSE Euronext, which owns exchanges around the world, including Amsterdam, Brussels, Lisbon, Paris, and the London Futures Exchange. We trade stocks, bonds, and derivatives all around the world, connecting traders, investors, and companies trying to raise capital to grow their businesses. NYSE Euronext will continue to grow and innovate in this globalized economy, never losing its reputation for the integrity and high standards that our listed companies and clients have come to expect.

>> TILE brings you exclusive opinions, explanations, and interviews from experts in every industry. To read more, click on Ask the Experts in the TILE Library.

Have a burning question or an expert you’d like to see interviewed? Just Ask TILE!

Why does the NYSE opening bell ring at 9:30?

Thursday, October 8th, 2009

The opening bell for the New York Stock Exchange (NYSE) has rung at 9:30am since 1985 when it was changed from 10:00am. The bell starts the daily trading session, which is the time in which all stocks are bought and sold on the trading floor. Until relatively recently, the technology to trade stocks from outside the trading floor didn’t even exist, so the trading session was really the only time when trading took place.

Now trading can be done at all hours from anywhere on the planet – even from your cell phone. However, the majority of trading is still done during the trading session. The board of the NYSE has discussed several times making the bell earlier to extend normal trading hours, but the hours haven’t changed for over 20 years.

Wall Street is…

Thursday, August 20th, 2009

Wall Street is literally a street in New York City where the New York Stock Exchange and many major financial institutions are located. The term “Wall Street” is often used to refer to the investment community in general.