Posted at 7:00 a.m.
At the Exchange, there are regular hours (9:30 a.m. to 4 p.m. on business days) and extended pre- and post-market hours. We understand that it works electronically. So what are brokers doing on the stock exchange floor?
Nicholas Clift
Most of the world’s major stock markets operate entirely by electronic and computerized means.
But there are markets like the New York Stock Exchange that maintain a trading floor despite the ubiquity of transactional technology.
Moreover, it is still towards this type of prosecutor’s office with their traders bustling around electronic screens that the media cameras turn to illustrate their stock market news reports.
But in reality, the New York Stock Exchange is one of the few major stock exchanges in the world where a significant share of trading is still done on a trading floor.
It is also the only one in North America to operate in this way since the closing last year of the trading floor of the Chicago Mercantile Exchange, which specializes in futures contracts on commodities and energy, basis as well as financial indicators.
Stock exchanges
In a trading floor like the New York Stock Exchange, stock prices are determined by auction between specialized traders and licensed brokers.
Buy or sell orders from investors are routed by brokers to their delegates on the trading floor. These delegates then go to a specific place on the trading floor where the shares concerned are traded.
This place is in fact a trading post where there are a few people designated as “specialists” in a certain number of actions. Their job is to bring together the buyers and sellers of the shares under their supervision.
Current prices for these shares are determined by bidding between the highest total a buyer is willing to pay and the lowest price at which a seller is willing to sell their shares.
On the New York Stock Exchange, which remains one of the most influential markets in the world, hundreds of millions of stocks and stock options are traded every day, with a total value of 100 billion US dollars.1.
Electronic exchanges
In fully electronic exchanges, such as the Toronto Stock Exchange and NASDAQ in New York, trading takes place through a network of computers and telecommunications linking licensed brokers.
Unlike stock exchanges, stock prices are based on the bid and ask prices of the most recent trades recorded.
These prices are also set by brokers who act as “market makers”, or ” market-makers in stock market parlance, with respect to the shares in their fold.
In the case of the NASDAQ in particular, the “all-electronic” operation as well as its specialization in technology companies have favored its growth to the point of challenging the historical predominance of the New York Stock Exchange among investors.
Hundreds of millions of stocks and stock options are traded on the NASDAQ each session, with a total value of US$90 billion.2.
1. and 2. Figures obtained from the American firm CBOE Global Markets, which specializes in financial securities market management systems.