New York Stock Exchange

New York Stock Exchange

The largest of the countries organized securities exchanges. Tracing its origins to the 1792 Buttonwood Agreement among street brokers, the exchange developed from an outdoor market on Wall Street in lower Manhattan into the New York Stock and Exchange Board in 1817. The current name was adopted in 1863.

The exchange trades stocks that it lists, or registers. Trading takes place on the exchange at various official posts where markets are maintained by traders known as specialists. They buy and sell their assigned stocks from other floor brokers who represent themselves and the public. Specialists and other brokers purchase their seats on the exchange and are required to meet certain capital requirements in order to trade. From just a handful of stocks in its first decade, the exchange by the end of the twentieth century listed more than 2,900 different companies, both foreign and domestic. In terms of value represented, this made it the world's largest stock exchange.

After many smaller disasters, the exchange suffered its most serious decline in the stock market crash of 1929. As a result of congressional investigations that followed, the exchange was subjected to federal regulation by the Securities Exchange Act of 1934. This act put all stock exchanges under the jurisdiction of the stock exchange commission. Two 1975 developments affecting the New York Stock Exchange were the consolidation of the ticker tape reporting transactions into a national integrated system with other exchanges and the abolition of fixed commission rates in favor of negotiated rates.

Financial Highlights

• Included in the GAAP results for the quarter ended June 30, 2008 were $38 million of pre-tax merger expenses and exit costs (primarily severance charges incurred in connection with a voluntary resignation incentive program), as compared to $16 million in the comparable period a year ago. In addition, the GAAP results for the quarter ended June 30, 2008 were favorably impacted by the reversal of a $36 million accrual relating to certain litigation between a former Chairman& CEO and the NYSE, which was finally terminated on July 31, 2008.
• On a non-GAAP basis, net transaction revenues (defined as cash and derivatives trading revenues net of liquidity payments and routing and clearing expenses) increased $60 million or 17% for the three months ended June 30, 2008 versus the year ago period and are up 28% on a year-to-date basis.
• In May, NYSE Euro next completed the statutory buy-out of the remaining minority Euro next shareholders who held approximately 2% of the shares of Euro next N.V. for an aggregate consideration of €252 million ($389 million). As a result of this buy-out, Euro next N.V. and its subsidiaries are now wholly-owned by NYSE Euro next.
• As a result of the Euro next transaction, and following the reorganization of certain of our businesses, the effective tax rate of NYSE Euro next on a non-GAAP basis was 27% for the three months ended June 30, 2008 as compared to 32% for the same period a year ago. For the balance of the year, NYSE Euro next anticipates providing income taxes at an effective tax rate of 29%.
• As of June 30, 2008, NYSE Euro next had a strong financial position with $1.3 billion of cash, cash equivalents, investment and other securities (including $155 million related to Section 31 fees collected from market participants and due to the (SEC) and $3.0 billion in debt obligations.
• On April 11 and May 21, NYSE Euro next successfully launched a 7-year €750 million ($1,181 million) bond issue in the Euro market and priced a 5-year $750 million underwritten public offering of senior notes in the U.S. , respectively. These offerings enabled NYSE Euro next to lengthen the maturity profile of its debt and to fix approximately 65% of its total debt at a weighted average interest rate of 5.1%. This compares to NYSE Euro next’s average variable borrowing rate of 3.7% on commercial paper for the quarter.
• American Stock Exchange (Amex) members overwhelmingly approved the proposed merger with NYSE Euro next. The transaction is expected to close in the third quarter of 2008 following SEC approval. While we anticipate Amex to generate operating losses for the balance of this year, we expect the transaction to produce $100 million in run-rate savings and to be accretive by the end of 2009.
• Following the close of the Amex transaction, NYSE Euro next intends to implement the previously announced $1 billion stock repurchase program, in accordance with SEC rules and subject to strategic and credit considerations.
• On July 31, 2008, the NYSE Euro next Board of Directors approved a resolution to remove the transfer restrictions on approximately 42 million common shares issued in connection with the merger of NYSE and Archipelago, effective upon closing of the Amex transaction. The restrictions on these shares, which represent approximately 16% of the 266 million total common shares outstanding as of June 30, 2008, were originally scheduled to lapse on March 7, 2009.
• NYSE Euro next will make a $0.30 quarterly dividend payment on September 30, 2008 to shareholders of record as of September 15, 2008.

£1,000,000,000 crash on New York stock exchange

Wild selling in record turnover of 13,000,000 shares | Bankers statement stems panic

October 25, 1929
Friday October 25, 1929

The heavy break on the New York Stock Exchange, which began on Saturday and has been increased on each succeeding day except Tuesday, when there was a slight recovery, reached catastrophic proportions yesterday with a crash described as the worst in the history of the Exchange. The floor of the Exchange was a scene of the wildest excitement, and the shouts of the brokers seeking to unload their stocks at any price could be heard in the streets. It is estimated that £1,000,000,000 in paper values had been swept away by the close of the market. The day's sales were 12,895,000 shares, against the previous highest number of 8,240,000 on March 26. The tape machine records of prices finished nearly three hours behind the market. The fall at the opening of the market was so rapid that a conference of leading bankers was hastily called and a reassuring statement issued. This had a temporary rallying effect in certain sections, but the liquidation was continued elsewhere. That bankers' statement had served to allay market fears to some extent was shown in a last-hour rally in a few sections, in which last prices were above the worst. The slump is the worst since the historic panic of 1907 when the paper value of securities was destroyed by hundreds of millions and America had to import £20,000,000 in gold to prevent even more far-reaching disaster.

London reactions

Stockbrokers Stay for the Slump

From a City Correspondent, London

For hours after the Stock Exchange had closed this afternoon there were hundreds of stockbrokers and clerks congregating in Sorter’s Court, off Throgmorton Street, or rushing between there and their offices in pouring rain, for New York's slump has its importance to the Stock Exchange here. By tea-time some of the American stocks were as much as $30 below the London closing prices of the previous night, while some of the Anglo-American shares, like a well-known gramophone share, had dropped by pounds instead of normal half-crowns.

Shorter's Court is surrounded by offices holding telephone operators, and in some of these were women clerks with their hats on still hard at work, but quite ready to dash away home directly things quietened down.

In the "Court" dealers changed their quotations so rapidly, as New York prices fluctuated, that even smart stockbrokers and experienced financial journalists had difficulty in ascertaining actual prices. Men dealt in shares by the thousand, and merely added a "Thank you."

By seven o'clock Wall Street began to buy, and very soon afterwards the Stock Exchange men began to leave Throgmorton Street for home, or to deal by telephone from their offices. At 7.30 the "street market" was closed, and Throgmorton Street was left to a solitary policeman on the wettest and dullest night the City can remember this year.

"Record" sales on both exchanges

Exchange Telegram, New York

It is estimated that $5,000,000,000 (£1,000,000,000) in market values were swept away in the worst crash in the history of the Stock Exchange to-day, eclipsing yesterday's crash. By 2 p.m. 11,000,000 shares had frantically changed hands, and at 3 p.m. the "tickers" were nearly three hours behind. Late in the session some of the strongest banks in the country began supporting the leading stocks, causing temporary rallies, but the general liquidation continued. Meanwhile all stocks and commodity markets throughout the country declined in sympathy. The day's sales totaled 12,895,650 shares, a "record" for all time, while sales on the kerbed exchange amounted to 6,337,400 shares, also a "record."

Pandemonium reigned all day. The shouts of the frenzied brokers, fighting on the floor of the exchange to sell their stocks at the best available prices, could be heard in the street.