STOCK
MARKET INSIGHTS
from Dr. Greg Valentine
USI Center for Economic Education Director
Provided each week during the running of the Stock Market Game
ON THE FLOOR OF THE NEW YORK STOCK EXCHANGE (NYSE)
Stock trading on the NYSE trading floor occurs auction style: In each transaction, stock is sold to the highest bidder and bought for the lowest price.
Trading begins at 9:30 am EST/EDT and ends at 4:00 p.m. when the bell is rung from the podium. The NYSE rents booths to brokerage houses. When an order is received form one of its offices, a floor broker takes the order to the appropiate specialist trading post to carry out the transaction. Trading Post Display Units show the day's activity at the post. They report the stocks traded, the last sale price, and the amount purchased.
Various stocks or groups of stocks are traded at a trading post near the specialist position. Each company's stock trades at only one post on the floor of the NYSE, so the trading can be traced accurately.
Trading actually occurs between two floor brokers who show up at the post at the same time. They use what is called the "open cry out." Each broker must "cry out" their bid and ask price so that all may hear. The brokers also use hand motions to indicate if they desire to but or sells shares of stock. The brokers must also include by hand the number of shares they wish to either but or sell and the price they are willing to accept. This sounds like mass confusion, however, this system has been in place since the inception of the NYSE.
After a transaction has been completed, a reporter uses a hand-held wireless device to record the stock symbol, the price, and the initiating broker. The device transmits the information within seconds to the NYSE electronic tape.
Confirmation is made when the floor broker sends the successful trade details back to the branch office where the order originated.
The Stock Market Game is sponsored by the USI, Center for Economic Education, Securities Industry Foundation for Economic Education, Indiana Secretary of State's Securities Division, and Evansville Courier Company. Watch each week for more background information about the stock market