N-Y.net

The New York Stock Exchange is another part of New York that makes the state so unique. Founded in 1817, it is just as the name describes: a stock exchange whose origins are in New York City. As a stock exchange, the New York Stock Exchange is designed as an efficient way for buyers and sellers to trade stocks of public companies in a single place. The theme of the stock exchange, an auction style format for buying and selling company stocks, makes it the best place to produce the fairest prices for stocks.

The New York Stock Exchange is also known as the Big Board and is situated on Wall Street in New York City. In fact, Wall Street has become synonymous with the New York Stock Exchange. It is the largest stock exchange in the world by virtue of its dollar per stock volume, or capitalization, which is currently over $25 trillion. And of all the stock exchanges in the world, the New York Stock Exchange has the second highest number of securities at 2,764. It was number one until the 1990’s when NASDAQ, another American stock exchange, exceeded it with over 3,300 securities.

Aside from simple statistics, the New York Stock Exchange is notoriously known as one of the contributors to the Great Depression of the 1930’s. On October 24, 1929, the New York Stock Exchange crashed and a panic ensued for investors to sell off everything they could. This contributed to Black Tuesday, Oct 29, and was historically marked as the precursor to the Great Depression. In 1938, however, several practices were put into place to protect investors in the future.

Other crashes within the New York Stock Exchange have prompted other protective measures. The Dow Jones Industrial Average, and stock market index on the New York Stock Exchange, experienced a crash of 22% during a single day in 1987. This led New York Stock Exchange advisors to impose halting rules on stock trading during similar single-day drops. Today, if the Dow Jones Industrial Average drops 10, 20 or 30 percent, trading will halt for one hour, two hours, or the rest of the day respectively. This measure is meant to avoid any reoccurrence of Black Tuesday in 1929.

Current the New York Stock Exchange is revisiting the need for protective measures. The current economy is suffering due to the sub-prime lending that has been going on in the mortgage and financial arenas. This economic woe is reflected on the New York Stock Exchange, as it has lost a considerable number of points in recent weeks. The US mortgage crisis is also hitting other stock markets, not just the New York Stock Exchange. The next several weeks, if not months, will show just whether the New York Stock Exchange will precipitate an economic recession like that which it has done before.

Filed under: Wall Street by Newyork