Exam (elaborations)
NYSE TOUR QUESTIONS AND ANSWERS FULLY SOLVED
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Exam of 5 pages for the course NYC Tour at NYC Tour (NYSE TOUR)
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NYSE TOURFACADE – answer NYSE celebrates its 225th Anniversary on May 17, 2017.
The NYSE can trace its roots back to 1789 when George Washington was inaugurated
as president at Federal Hall.
In 1790, Alexander Hamilton, secretary of the treasury, planned to finance the new
nation and fund its debt after the Revolutionary War and within a few years, trading in
government bonds brought capital markets into existence.
In 1792, 24 brokers who met to trade regularly under a Buttonwood Tree on Wall St.
signed the Buttonwood Agreement forming an official organization that later became the
New York Stock Exchange.
The Buttonwood Agreement established confidence and order in the market by
declaring:
The brokers would trade solely with each other
They would all charge the same commission rate of .25%
The "Call Market" - Trading operated as a Call Market where the NYSE President used
a gavel to open and close trading for one stock at a time, each trading for 5 minutes.
Up to 152 listed companies were traded in the Call Market until 1871 when trading
changed to a "Continuous Market".
The "Continuous Market" - 1871-2005
Stocks began to trade simultaneously and a bell was installed to mark the beginning
and end of the daily trading session. Every stock had a Specialist and at least two
clerks.
Today, an average of 2,400 listed companies trade on the NYSE.
In 1903, the newly built Trading Floor was considered one of the largest spaces in New
York and was the first air conditioned space in NYC.
HISTORY - answerOn April 22, 1903 the current 11 Wall Street building opened. The
NYSE Building Committee oversaw every detail of the new building's construction. It
took two years and $4 million to complete the new structure opening in 1903.
George B. Post designed every detail of the building form the façade down to the coat
racks that are located throughout the 6th floor. The statuary on the pediment of the
building was designed by John Quincy Adams Ward, an eminent sculptor of the late
19th century. John Quincy Adams Ward also designed the statue of George
Washington located on the steps of Federal Hall. The pediment is titled "Integrity
Protecting the Works of Man." Standing at the center is a female figure who represents
"Integrity" which is at the heart of the securities business. On either side are figures
representing various sources of wealth and the means of invention -- Agriculture and
Mining on her left and Science, Industry and Invention to her right.
The original marble figures were replaced with lead-coated copper replicas in 1936, due
to defects in the original stone and deterioration from pollution.;
, DESIGNATED MARKET MAKERS (DMMS) - answerThe DMMs contribute to our
unique market model which fuses advanced tech capabilities with the oversight of
market professionals. This human connection creates orderly opens and closes, lowers
volatility, provides deeper liquidity and improves prices.
The NYSE is the only exchange that uses DMMs.
DMMs are located in the center of the Trading Floor in the figure 8 booths.
Today, a single Designated Market Maker is responsible for:
Creating competitive bids and offers in their assigned stocks all day
Overseeing an average of 50 stocks each using NYSE's cutting edge technology and
their expertise
Providing price stability by buying and selling again market trends
DMMs are especially important during more volatile days below because they can step
in to minimize market imbalances. Days like this include:
Expiration
IPOs
Days with breaking news
2,400 stocks are listed at the NYSE and each one has a specific DMM who is
responsible for that company's stock.
Because of a DMM's expertise, listed companies benefit from:
Deeper pools of liquidity
Reduced volatility
BROKERS - answerFloor brokers are employees of member firms who execute trades
on the exchange floor on behalf of the firm's clients.
They act as agents, buying and selling stock for the public (institutions, hedge funds,
broker/dealers).
Floor brokers are physically present on the trading floor and are active participants
during NYSE opening and closing auctions, as well as throughout the trading day.
There are two types of brokers
House Brokers
Employed by large brokerage houses such as Goldman Sachs, MGS, First Boston
(Credit Suisse), JPMorgan
Represent the interests of their employer only
Independent brokers
Broker Dealers: Individuals who only execute business on the floor of the NYSE via
their handheld device
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