What Is the New York Stock Exchange?

But the NYSE is far more than just a symbol of American capitalism; it’s the largest and most influential stock exchange in the world, shaping economies, driving business growth, and offering investors a gateway to wealth creation.

Read on to learn more about the NYSE, how it works, and why it matters. 

NYSE: What It Is and Why It Matters

The New York Stock Exchange is the largest and most traded stock exchange globally, facilitating the exchange of nearly $19 billion in assets each active day.

Located at 11 Wall Street in New York City, it serves as a marketplace where shares of publicly traded companies are bought and sold. The NYSE building, with its grand columns, is a designated National Historic Landmark.

Often called “The Big Board,” the NYSE plays a critical role in the global economy by providing companies with access to capital and giving investors the opportunity to own a stake in some of the world’s biggest businesses.

Each trading day, millions of transactions happen here, connecting buyers and sellers from around the world.

All of these transactions are overseen by the Securities and Exchange Commission (SEC), a federal government body responsible for regulating public companies and trades. Founded after the Great Depression, the SEC ensures that companies provide full financial disclosures and updates to protect investors and maintain market transparency.

Beyond facilitating transactions, the NYSE also serves key economic functions:

• Providing Liquidity: The size of the NYSE and regulated trading hours ensure investors can buy or sell shares easily. This keeps the market active and provides the efficiency needed to price shares of public companies accurately. 
• Enabling Price Discovery: Stock prices fluctuate based on supply and demand, and the NYSE gives real-time insight into a company’s value and investor sentiment, keeping prices accurate to the current market. 
• Maintaining Market Stability: The NYSE has built-in safeguards like circuit breakers to prevent extreme volatility and panic selling. These safeguards are necessary for protecting both individual investors’ capital and the overall economy (as seen during the stock market crash of 1929). 
• Acting as an Economic Barometer: NYSE stock performance informs economists about the broader economy, especially through major indexes like the S&P 500 and the Dow Jones Industrial Average (DJIA).

The NYSE isn’t just a massive stock exchange—it’s a powerhouse of financial movements that influence economies around the globe. 

A Brief History of the NYSE

The NYSE traces its origins back to 1792, when 24 stockbrokers and merchants signed the Buttonwood Agreement under a buttonwood tree on Wall Street. Their goal was to create a formalized system of buying and selling stocks and bonds.

Over time, the NYSE grew alongside the American economy:

• 19th Century: Became central to funding the Industrial Revolution in the United States
• 20th Century: Survived and adapted through events like the Great Depression and World War II
• 2006: Merged with electronic trading platform Archipelago, embracing a hybrid model of floor and electronic trading
• 2007: Merged with Euronext, forming the first transatlantic stock exchange

The trading floor was once the scene of intense, high-energy shouting matches called “open outcry” before electronic trading took over. Today, the NYSE blends its traditional floor trading with advanced technology to serve a global market.

How the NYSE Works

At its core, the NYSE is a marketplace where more than 1,800 individual companies trade shares of stock, options, and bonds. As new businesses go public and established firms grow, the NYSE continues to serve as a vital marketplace where capital meets opportunity, shaping the future of global investing.

Here’s a simple breakdown of how the NYSE works:

• Companies must meet strict requirements (including size and profitability standards) to have their shares listed on the NYSE.
• Transactions occur through a combination of Designated Market Makers (DMMs)—professionals on the floor who maintain orderly trading by matching buyers with sellers—and electronic trading. While floor trading still exists, most trades today happen electronically at lightning speed.
• Trading officially opens at 9:30 AM and closes at 4:00 PM Eastern Time with the famous ringing of the bell. The opening and closing bells are often rung by celebrities, CEOs, and even athletes.

Basic Financial Requirements

Before listing, a company must have an anticipated initial public offering (IPO) price of at least $4 a share, determined by analysts and underwriters. The company must have a total market capitalization of at least $100 million, with at least $60 million of this equity held by shareholders. 

Income Requirements

To qualify for the NYSE, a company’s pre-tax earnings must total at least $10 million over the past three years, with at least $2 million in each of the two most recent years. Companies with at least $500 million in global market capitalization and $100 million in revenue over the last 12 months may be able to skip this income requirement. 

Corporate Structure Requirements

Publicly traded companies need to be structured to ensure SEC compliance. They must offer at least 1.1 million publicly traded shares, with at least 400 shareholders each holding at least 100 shares. Publicly traded shares must be valued at a minimum of $40 million, and the board of directors must have a majority of independent members.

Types of Companies

Stocks found on the NYSE usually represent blue-chip, well-known companies with longer histories in sectors like finance, consumer staples, and energy. The Nasdaq is primarily a technology exchange, with more innovators and startups.

Listing Requirements

Companies trading on the NYSE must have a minimum of 1.1 million publicly traded shares and a minimum market capitalization of $100 million. The Nasdaq has more lenient requirements, allowing companies to trade their shares with capitalizations as low as $50 million. Earnings requirements on lower tiers are also less strict, and go as low as $750,000 in annual net income. 

Volatility

Because the NYSE's blue-chip companies are well-established, industry-dominating names in their respective fields, they tend to hold up better to economic uncertainty, with a history of price and financial data to maintain stability during volatile periods. The Nasdaq's roster of smaller companies may not have the same investor confidence or company history, making them more volatile—a double-edged sword depending on whether the market is positive or negative. 

The NYSE: Heart of Global Finance

The New York Stock Exchange isn’t just a place where stocks are traded—it’s a symbol of economic opportunity and a vital engine of capitalism. Whether you dream of becoming an investor or simply want to understand financial news better, knowing the basics of the NYSE is an essential first step.

As markets continue to evolve, the NYSE stands tall — a bridge between American history and the future of global finance.

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