New York Stock Exchange (NYSE): Definition, How It Works, History

What Is the New York Stock Exchange (NYSE)?

The New York Stock Exchange (NYSE) is a stock exchange located in New York City that is the largest equities-based exchange in the world, based on the total market capitalization of its listed securities.

Formerly run as a private organization, the NYSE became a public entity on March 8, 2006, following the acquisition of electronic trading exchange Archipelago. In 2007, a merger with Euronext—the largest stock exchange in Europe—led to the creation of NYSE Euronext, which was later acquired by Intercontinental Exchange, Inc. (ICE), the current parent of the New York Stock Exchange.

Understanding the New York Stock Exchange (NYSE)

Located on Wall Street in New York City, the New York Stock Exchange—also known as the "Big Board"— consists of one trading floor for equities and another for the NYSE American options exchange. The main building located at 18 Broad St. and the one at 11 Wall St. were both designated historical landmarks in 1978.

The NYSE relied for many years on floor trading only, using the open outcry system. Many NYSE trades have transitioned to electronic systems relying mainly on designated market makers to conduct both the physical and automated auctions. Quotes offered by DMMs are on par with what floor traders and other market participants offer.

Currently, the NYSE is open for trading Monday through Friday from 9:30 a.m. to 4:00 p.m. ET. The stock exchange is closed on certain U.S. holidays. When these fall on a Saturday, the NYSE is sometimes closed the preceding Friday. When holidays fall on a Sunday, the NYSE may be closed the following Monday.

The NYSE's Opening and Closing Bells

The opening and closing bells of the exchange mark the beginning and end of the trading day. The opening bell is rung at 9:30 a.m. ET, and the closing bell is rung at 4:00 p.m. ET, closing trading for the day. But trading days did not always begin and end with a bell—the original signal was actually a gavel. During the late 1800s, the NYSE changed the gavel to a gong. The bell became the official signal for the exchange in 1903 when the NYSE moved to 18 Broad St.

Prior to 1995, the exchange's floor managers rang the bells. But the NYSE began inviting company executives to ring the opening and closing bells on a regular basis, which later became a daily event. The executives are from companies listed on the exchange, who sometimes coordinate their appearances with marketing events, such as the launch of a new product or innovation, or a merger or acquisition.

Sometimes, other public figures, such as athletes and celebrities, ring the bell. Some of the more notable figures to ring it include singer/actor Liza Minnelli, Olympic medalist Michael Phelps, and rapper Snoop Dogg. In July 2013, United Nations Secretary Ban Ki-moon rang the closing bell to mark the NYSE joining the U.N. Sustainable Stock Exchanges Initiative. 

History of the NYSE

The New York Stock Exchange dates back to May 17, 1792. On that day, 24 stockbrokers from New York City signed the Buttonwood Agreement at 68 Wall St. The New York Stock Exchange kicked off with five securities, which included three government bonds and two bank stocks.

Thanks to the NYSE's head start as the major U.S. stock exchange, many of the oldest publicly traded companies are on the exchange. Consolidated Edison (ED) is the longest-listed NYSE stock, joining in 1824 as the New York Gas Light Company. Along with American stocks, foreign-based corporations can also list their shares on the NYSE if they adhere to certain listing standards.

A series of mergers has given the New York Stock Exchange its massive size and global presence. The company started as NYSE before merging with the Euronext and adding the American Stock Exchange. NYSE Euronext was purchased in an $11 billion deal by the Intercontinental Exchange (ICE) in 2013. The following year, Euronext emerged from ICE via an initial public offering (IPO), but ICE retained ownership of the NYSE.

A Few Notable Dates in the NYSE’s History

• Oct. 24, 1929: The most devastating stock market crash in the history of the U.S. began on Black Thursday and continued into a sell-off panic on Black Tuesday, Oct. 29. It followed the crash of the London Stock Exchange, which took place in September and signaled the onset of the Great Depression, which affected all of the industrialized countries in the West. 
• Oct. 1, 1934: The NYSE registered as a national securities exchange with the SEC.
• Oct. 19, 1987: The Dow Jones Industrial Average (DJIA) dropped 508 points or a loss of 22.6% in a single day.
• Sept. 11, 2001: Trading was shut down for four days at the NYSE following the 9/11 attacks and resumed on Sept. 17. About $1.4 trillion was lost in the five days of trading following the reopening—the biggest losses in NYSE history.
• October 2008: NYSE Euronext completed the acquisition of the American Stock Exchange for $260 million in stock.
• May 6, 2010: The DJIA suffered its largest intraday drop since the crash of Oct. 19, 1987. It dropped 998 points in what is known as the 2010 Flash Crash.
• Dec. 20, 2012: ICE proposed to buy NYSE Euronext in a stock swap worth $8 billion.
• May 1, 2014: The NYSE was fined $4.5 million by the Securities and Exchange Commission in order to settle charges of market rule violations.
• May 25, 2018: Stacey Cunningham became the first female president of the NYSE.
• March 16, 2020: The onset of COVID-19 pandemic fears led to the DJIA suffering its largest daily point drop in history as it fell 2,997.10 points from the previous close. Percentage-wise, it was the third worst day ever.
• March 23, 2020: The NYSE temporarily closed floor trading due to the COVID-19 pandemic, opting to continue its operations electronically.
• March 24, 2020: The DJIA recorded its largest one-day point gain on expectation of a stimulus relief bill. Percentage-wise, it was the fifth best day ever.

The Bottom Line

The New York Stock Exchange (NYSE) is the oldest and most influential securities exchange in the United States, and is the largest stock exchange in the world by total listed company market cap. With humble beginnings under a buttonwood tree in Manhattan, the NYSE is now a landmark that epitomizes Wall Street. Today, the NYSE lists the most important publicly-traded American companies and is still seen as the premier venue for stock trading.