What is the Stock Exchange?

A stock exchange is also known as a security exchange. It facilitates investors by bringing governments and corporations to one place. An investor can thus buy and sell the securities. A stock exchange is not the place that owns shares. There are several exchanges available for the trading of stocks. One of those exchanges is the New York Stock Exchange (NYSE). It is crucial to analyse the relations between the exchanges and the companies. For the purpose of protecting the investors on the stock exchange, various conditions need to be fulfilled for distinct exchanges. 

New York Stock Exchange

New York Stock Exchange is an auction-based exchange. This stock exchange is also mentioned as “the Big Board”. It is the earliest stock exchange in the United States and the biggest stock exchange in the world. It provides the brokers and investors with the facility to communicate physically for buying and selling stocks. Numerous functions that are involved in the exchange have been moved to electronic trading platforms. But the NYSE is still one of the world’s leading auction-based exchanges where market makers are present physically at the centre. Only those companies can be listed on the New York Stock Exchange that fulfills all the listing requirements. 

Working of New York Stock Exchange

The exchange of commodities, bonds and equities brings liquidity to the market. Stocks are accessible for the first time on the stock exchange platform after the particular company processes its initial public offering (IPO). The shares are sent to initial public shareholders (primary market) in an IPO. The IPO then makes the shares available to the public shareholders. The shares with public shareholders can be bought or sold on the secondary market. The supply and demand flow analysed by the exchange decides the particular stock’s price. According to the account type of the brokerage amount, an individual can check and monitor the action of prices. 

The opening auction and the closing auction

The official time for the New York Stock Exchange opening is 9:30 a.m. The opening auction begins. Before the opening of the market, orders can be approved. Some orders can only be exchanged only at the open auction. Market-on-open orders expect and look to buy shares at the real-time market price. Limit-on-open orders look to purchase a limited number of shares. The data showed every trading day consists of a price for reference for each stock. The closing action occurs at the end of the whole day of trading. The official time for the New York Stock Exchange closing is 4:00 p.m.  Market-on-close orders expect, and look to buy shares at the real-time market price. Limit-on-close orders look to purchase a limited number of shares at the time of closing. 

Conclusion

Trade is less done in physical locations or centres and more through the electronic medium in recent times. Modern markets are getting less linked with physical trade centres. The use of electronic communication networks is increasing due to several advantages. The speed of transactions increases and the cost of transactions is reduced. During the past few years, numerous other trading platforms called Alternative trading systems (ATS). Electronic communication networks, call markets, electronic trade matching, and dark pools are examples of alternative trading systems.