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MAPPING A TRADE AT NYSE & NASDAQ –CHANGES THROUGH TIME

MAPPING A TRADE AT NYSE & NASDAQ –CHANGES THROUGH TIME. Michael Ahearn. BA 543: Financial Markets. April 2011. STOCK MARKET BASIC HISTORY. 1793: Buttonwood Agreement –Start of NYSE 1867: 1 st Stock Ticker –Revolutionizes Stock Market

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MAPPING A TRADE AT NYSE & NASDAQ –CHANGES THROUGH TIME

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  1. MAPPING A TRADE AT NYSE & NASDAQ –CHANGES THROUGH TIME Michael Ahearn BA 543: Financial Markets April 2011

  2. STOCK MARKET BASIC HISTORY • 1793: Buttonwood Agreement –Start of NYSE • 1867: 1st Stock Ticker –Revolutionizes Stock Market • 10/29/1929: Black Tuesday –DJIA Falls ~11%, Start of Great Depression • 1971: NASDAQ Formed -1stElectronic Stock Market • Sept. 2008: Largest Crash In History –DJIA Lost ~21% In A Single Day

  3. OUTLINE • Extended History Of NYSE & NASDAQ • Last 11 YR’s Tech History • Differences Between NYSE & NASDAQ • Mapping A Trade • Video • Q&A

  4. STOCK MARKET HISTORY (1 of 3) • 1907: Panic of 1907 Triggered by Rumors & Bank Runs • 1913: Federal Reserve System Created • 1914: WW1 • 1920: Centralized Clearing System Established • 1929: Central Quote System Established • 1933: Securities Act of 1933 –Mandates Disclosure Requirements

  5. STOCK MARKET HISTORY (2 of 3) • 1934: Securities Exchange Act establishes SEC to prohibit fraud • 1966: Quote Data Is Fully Automated • 1968: Central Certificate Service (CCS) is Created • 1975: Fixed Commissions Abolished –Resulting in Brokerage Consolidation • 1976: Designated Order Turnaround (DOT) Established • 1978: Intermarket Trading System (ITS) is Inaugurated • 1984: Super Dot 250 Launches • 10/19/1987: The Crash –DJIA drops 22.61%

  6. STOCK MARKET HISTORY (3 of 3) • 1988: Circuit Breakers Introduced • 1991: NYSE begins off-hours trading • 1995: High Tech Trading Post Upgrade • 1996: Real-Time Tickers Introduced • 1997: Trading In Sixteenths • 1999: NYSE Unveils 3D Trading Floor • 09/11/01: Terrorist Attack WTC –NYSE Closes For 4 Days • 09/17/01: DJIA Drops 684.81 Points (2nd biggest drop) • 2002: Sarbanes Oxley Act

  7. NYSE TRADING FLOOR

  8. LAST 11 YR’S TECH HISTORY (1 of 2) TECHNOLOGYRAPID CHANGE • 2000: New Trading Facility Opens w/ Latest Display Technology & 1st NYSE ETF • 10/21/00: NYSE Direct+® • 01/29/01: Decimal Pricing for all NYSE Stocks • 01/24/02: NYSE OpenBook® • 12/15/05: NYSE Hybrid Market Launched • 12/30/05: Member Seat Sales Officially End • 10/10/06: Options Trading Platform Launches • 11/10/06: NYSE BondsSM -New Bond Trading Platform • June 2008: Algorithmic Trading Starts

  9. LAST 11 YR’S TECH HISTORY (2 of 2) TECHNOLOGYRAPID CHANGE • 06/24/08: NYSE Launches Realtime Stock Prices • 10/24/08: SpecialistsDesignated Market Makers(DMM) • Dec. 2008: 1st Migration toward NYSE Euronext’s Universal Trading Platform (UTP)

  10. NYSE vs. NASDAQ • No Physical Location, Purely Electronic Market. • Dealer’s Market (AKA Quote-Driven) • Traffic Control Is By Market Makers Who Act As Intermediaries Who Quote The Price • Known As The High Tech Market. • More Volatile & Growth Oriented. • Trades Occur Physically On The Trading Floor In NYC. • Auction Market (AKA Order-Driven), Day’s Open Price Is Determined By An Auction. • Traffic Control Is Conducted By Specialist. • Well Established Blue Chip Firms • More Stable

  11. VIDEOS • Minyanvill "Goldman Sachs Bailout“ • Minyanville "Short Selling"

  12. Q&A Thanks You, Michael Ahearn

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