What's New York Stock Exchange
The year 1792 AD is considered the true beginning of the New York Stock Exchange, in which investors began buying and selling stocks for the first time in the United States. This market continued to develop until it was officially registered in 1934 AD, and then it became a non-profit organization in 1971 AD. Its revenues in 1999 amounted to 735 million dollars and its profits exceeded 75 million dollars, meaning that its net profit equals about 10% of revenues, and this is considered well.
When entering the New York Stock Market, which receives visitors every trading day, the visitor will be surprised by the chaos and screaming in its large hall, in which there are about three thousand people working in the market on a daily basis, Figure.
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| The main trading floor of the New York Stock Exchange, and the trading boxes where specialists work |
| When we look closely at the nature of this market, we do not find it ambiguous in this way, as it contains 1,366 seats, one seat for each member registered in the market, and this number is fixed and rarely changes. Although market workers always appear to be standing, their membership is called a seat. |
The price of a seat varies from year to year depending on supply and demand, but it reached about 2.5 million dollars in 2002, and in 2004 it was only about 1 million dollars, and it recently returned in November 2005 to reach its highest price of 3.5 million dollars! The price of the seat has an indication of the movement of stocks and the demand of brokers and dealers for them. The higher the price indicates a large current or upcoming demand.
Most of the people you see on the trading floor are brokers affiliated with market members or are independent brokers who deal with those members. For every stock traded in the New York Stock Exchange, there is one person called the Specialist, and this person is located in a place called the Trading Post, where the specialist follows up on the stocks of several companies at the same time.
There are about 600 specialists working for 22 companies specialized in this field and officially registered in the New York Stock Exchange. Their role is to facilitate the buying and selling process and add stability and continuity to the trading process, as they provide the market with the liquidity necessary for the success of stock trading operations under their jurisdiction. Sometimes you find the specialist personally intervening and buying and selling to ensure the stability of stock prices and provide them with the necessary liquidity, even if the prices are in an unfavorable direction. However, he often does not interfere significantly in buying and selling operations, as his participation is estimated at about 10% of daily trading. This is due to the large size of the market, as there are thousands of sellers and buyers, which makes natural market forces the main determinant of prices and ensuring market continuity.
Here it is worth noting that most Arab markets do not have specialists working in this way, not even market makers as we will see in the NASDAQ market. Some people call major investors and speculators a market maker, and this is wrong, as the market maker or specialist, he is a person licensed for this work and adheres to numerous conditions and controls aimed at providing the market with the necessary flexibility and liquidity at any given time. We find that the market maker is legally obligated to buy when there are those who wish to sell, and he is obligated to sell when there are those who wish to buy, and in return the market maker does not pay a commission on the operations he carries out.
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