New York Stock Exchange

Question: Identify the main stock exhange of your country and critically evaluate the:Historical backgroundStructure and operationsProducts and marketsRole of investment banks in capital market activities Answer: The biggest stock exchange in our country is New York Stock Exchange, also called the Big Board. It is considered as the largest equity based exchange in the world and formerly it ran as a private organization but later on it became a public entity. Historical Background It was formed in the year 1817 with the name as New York Stock and Exchange Board and later in year 1863, it was changed to New York Stock Exchange. It all began with the signing of the Buttonwood Agreement by around 24 New York City stockbrokers and merchants in the year 1792. The bank of New York became the first listed company and those 24 brokers became the first members in this exchange and only five securities were traded that time. Later in 1934, it registered itself as a National Securities Exchange with U.S Securities and Exchange Commission and was incorporated as a non-profit organization but in 2005 it became a profit organization when Archipelago, the fully electronic exchange merged in (Buck, 1992) . Structure and operations The NYSE has a listing of around 1900 companies out of which 1500 are U.S companies. It has a market capitalization of more than US$ 16 trillion and average value of US$ 169 billion in daily trading. The trading of NYSE is fully automated and it takes place through the floor brokers and Designated Market Makers on the trading floor. Its operations include product planning and development, regulation and surveillance of the member firms, maintaining customer and government relations, economic research and other market operations. It operates from Monday to Friday from 9:30 a.m. to 4:00 p.m (NYSE, 2015). Products and markets NYSE platform is designed to match orders for all products which include Equities, Bonds, Options and Exchange-Traded Products. It has evolved in the market by responding with innovative partnerships, leading technologies and trading techniques, has more liquidity than any other stock exchange and is the leading market for small-cap companies (NYSE, 2015). It provides growth opportunities to the early stage companies and adds value to the shareholders by providing a fully integrated trading platform. Role of investment banks in capital market activities. Investment banks help in facilitating free flow of funds and allocation of capital in the market by acting as an intermediary between users and providers of capital. It assists the government, individuals and corporations in raising financial capital by acting as an agent of the client in issue of securities and by providing underwriting facilities. It helps a company to determine when a company shall come out with a public offer, best ways to manage public assets of a business and also advices in relation to expansion, mergers, acquisitions and other financial transactions. It also provides various ancillary services like trading of equity securities and derivatives, market making and fixed income instrument, currencies and commodities service in the capital market. Usual advices related to buying and selling of securities is given by the Investment Banks. References Buck, J.E 1992, The New York Stock Exchange: The First 200 Years. Greenwich Pub. Group NYSE 2015, New York Stock Exchange the official website, viewed 31 March 2016, https://www.nyse.com/.