stock exchange organized market for the trading of stocks and bonds (see bond ; stock ). Such markets were originally open to all, but at present only members of the owning association may buy and sell directly. Members, or stock brokers , buy and sell for themselves or for others, charging commissions for their services. A stock may be bought or sold only if it is listed on an exchange, and it may not be listed unless it meets certain requirements set by the exchange's board of governors. There are stock exchanges in all important financial centers of the world; the New York Stock Exchange (NYSE, in nearly continuous operation since 1792), which had a trading volume of $7.3 trillion in 1998, is the largest in the world. Tokyo, London, and Frankfurt also have major facilities, and Euronext, an inter-European exchange that merged with the NYSE in 2007 and combines facilities in Amsterdam, Brussels, Paris, and other cities, is also significant. By providing a centralized, ready market for the exchange of securities, stock exchanges greatly facilitate the financing of business through flotation of stocks and bonds. However, speculation in stocks can sometimes accentuate the instability of an economy. The reality of the Great Depression was emphasized by the stock market crash in 1929. The interstate sale of securities and certain stock exchange practices in the United States are regulated by federal laws administered by the Securities and Exchange Commission . Today, a large percentage of stocks are traded through such over-the-counter organizations as Nasdaq (National Association of Securities Dealers Automatic Quotations) and its European equivalent, Nasdaq Europe (formerly Easdaq). Through these organizations, many securities not listed on a major stock exchange may be traded by dealers using computer and telecommunications technology; in 1994, Nasdaq, on which many computer and other high-technology stocks are traded, surpassed the NYSE in annual share volume. After the deregulation of the British securities market in 1986, the London Stock Exchange saw a decline in business due to a new computerized market similar to Nasdaq. Computer-driven trade has significantly affected the stock exchange. Computer and telecommunications technology, besides opening a wide market in over the counter dealings, has also given rise to trading on an international level. Personal computers and modems allow trading to occur around the clock (after-hours NYSE and Nasdaq trading began in 1999), and the securities trading on one major stock exchange can now significantly affect the trading on others. Many contend that the traditional manner of trading will eventually become obsolete. Technology also now allows for "day trading," a high-risk business in which numerous computerized trades are made during a single day, with large gains (and large losses) possible. See also margin requirement . Bibliography: See A. Crump, The Theory of Stock Speculation (1983); D. L. Thomas, The Plungers and the Peacocks: An Update of the Classic History of the Stock Market (1989); E. S. Bradley and R. J. Teweles, The Stock Market (7th ed. 1998).
The NYSE is operated by NYSE Euronext, which was formed by the NYSE's 2007 merger with the fully-electronic stock exchange Euronext. The NYSE trading floor is located at 11 Wall Street and is composed of four rooms used for the facilitation of trading. A fifth trading room, located at 30 Broad Street, was closed in February 2007. The main building, located at 18 Broad Street, between the corners of Wall Street and Exchange Place, was designated a National Historic Landmark in 1978,[5] as was the 11 Wall Street building
History
The origin of the NYSE can be traced to May 17, 1792, when the Buttonwood Agreement was signed by 24 stock brokers outside of 68 Wall Street in New York under a buttonwood tree on Wall Street. On March 8, 1817, the organization drafted a constitution and renamed itself the "New York Stock & Exchange Board". Anthony Stockholm was elected the Exchange's first president (for other presidents, see List of presidents of the New York Stock Exchange).
The first central location of the Exchange was a room, rented in 1817 for $200 a month, located at 40 Wall Street. After that location was destroyed in the Great Fire of New York (1835), the Exchange moved to a temporary headquarters. In 1863, the New York Stock & Exchange Board changed to its current name, the New York Stock Exchange. In 1865, the Exchange moved to 10-12 Broad Street.
The volume of stocks traded increased sixfold in the years between 1896 and 1901, and a larger space was required to conduct business in the expanding marketplace.[8] Eight New York City architects were invited to participate in a design competition for a new building; ultimately, the Exchange selected the neoclassic design submitted by architect George B. Post. Demolition of the Exchange building at 10 Broad Street, and adjacent buildings, started on May 10, 1901.
The new building, located at 18 Broad Street, cost $4 million and opened on April 22, 1903. The trading floor, at 109 x 140 feet (33 x 42.5 m), was one of the largest volumes of space in the city at the time, and had a skylight set into a 72-foot (22 m)-high ceiling. The main façade of the building features six tall Corinthian capitals, topped by a marble sculpture by John Quincy Adams Ward, called “Integrity Protecting the Works of Man”. The building was listed as a National Historic Landmark and added to the National Register of Historic Places on June 2, 1978.[9]
In 1922, a building for offices, designed by Trowbridge & Livingston, was added at 11 Broad Street, as well as a new trading floor called "the garage". Additional trading floor space was added in 1969 and 1988 (the "blue room") with the latest technology for information display and communication. Yet another trading floor was opened at 30 Broad Street in 2000. As the NYSE introduced its hybrid market, a greater proportion of trading came to be executed electronically, and due to the resulting reduction in demand for trading floor space, the NYSE decided to close the 30 Broad Street trading room in early 2006. As the adoption of electronic trading continued to reduce the number of traders and employees on the floor, in late 2007, the NYSE closed the rooms created by the 1969 and 1988 expansions.
The Stock Exchange Luncheon Club was situated on the seventh floor from 1898 until its closure in 2006. [10]
The floor of the New York Stock Exchange in 1908
The NYSE announced its plans to acquire Archipelago on April 21, 2005, in a deal intended to reorganize the NYSE as a publicly traded company. NYSE's governing board voted to acquire rival Archipelago on December 6, 2005, and become a for-profit, public company. It began trading under the name NYSE Group on March 8, 2006. A little over one year later, on April 4, 2007, the NYSE Group completed its merger with Euronext, the European combined stock market, thus forming the NYSE Euronext, the first transatlantic stock exchange.
Presently, Marsh Carter is Chairman of the New York Stock Exchange, having succeeded John S. Reed and the CEO is Duncan Niederauer, having succeeded John Thain.
The KSE is the biggest and most liquid exchange in Pakistan and in 2002 it was declared as the “Best Performing Stock Market of the World” by Business Week. As of December 20, 2007, 671 companies were listed with the market capitalization of Rs. 4364.312 billion (US$ 73 Billion) having listed capital of Rs. 717.3 billion (US$ 12 billion). On December 26, 2007, the KSE 100 Index reached its ever highest value and closed at 14,814.85 points.
Foreign buying interest had been very active on the KSE in 2006 and continued in 2007. According to estimates from the State Bank of Pakistan, foreign investment in capital markets total about US$523 Million. According to a research analyst in Pakistan, around 20pc of the total free float in KSE-30 Index is held by foreign participants.
KSE has seen some fluctuations since the start of 2008. One reason could be that it is the election year in Pakistan, and stocks are expected to remain dull. KSE has set an all time high of 15,000 points, before settling around the 14,000 mark.
Karachi stock exchange Board of Directors has recently (2007) announced plans to construct a 40 story high rise KSE building, as a new direction for future investment.
Disputes between investors and members of the Exchange are resolved through deliberations of the Arbitration Committee of the Exchange.
KSE began with a 50 shares index. As the market grew a representative index was needed. On November 1st, 91 the KSE-100 was introduced and remains to this day the most generally accepted measure of the Exchange. Karachi Stock Exchange 100 Index (KSE-100 Index) is a benchmark used to compare prices overtime, companies with the highest market capitalization are selected. To ensure full market representation, the company with the highest market capitalization from each sector is also included.
In 1995 the need was felt for an all share index to reconfirm the KSE-100 and also to provide the basis of index trading in future. On August the 29th, 1995 the KSE all share index was constructed and introduced on September 18, 1995.
