1. How The Stock Market Works Today

2. The New York Stock Exchange Stocks are traded on the “floor” About the size of a football field Contains hundreds of brokers, clerks and assistants

3. Who Can Trade? You must first be accepted for membership The number of memberships is limited to 1,366 The price of a seat is based on demand During the 1977 recession--$35,000 Late 1990s—as high as $4 million In 2005—$3.25 million Today the NYSE sells one-year licenses to trade directly on the exchange

4. Stock Exchange Members Floorbrokers Largest group 2 Groups within this group Commission brokers Employed by brokerage firms that are members of the exchange Independent brokers Work for themselves and handle orders for brokerage firms that do not have full-time brokers or whose brokers are too busy to handle all their business

5. Allied Members General partners or voting stockholders of a member firm of the exchange Not personally members Cannot do business on the trading floor

6. Specialists An exchange member who is an expert in several stocks Trades only in those stocks If a person wishes to buy or sell one of the particular stocks they will find the specialist

7. The Stock Exchange Officers Board of Directors 12 public representatives 12 exchange members 1 full-time paid chairman An executive vice-chairman A president

8. The American Stock Exchange Has the second largest volume of trading in the United States Located near the NYSE at 86 Trinity Place in New York In general trades stocks of smaller companies than the NYSE Offers more personal service than the NYSE

9. Over-the-Counter Markets The majority of U.S. stocks are traded over-the-counter It consists of an “electronic marketplace” Brokers use computers to make trades through a network called the National Market System (NMS)

10. Pink Sheet Stocks Not part of the NMS Information about these stocks given in Pink Sheets Daily publication printed on pink paper Put out by the National Quotation Bureau Given the bid and asked price for thousands of OTC stocks not listed in financial publications Also gives the name and phone number or firm

11. NASDAQ National Association of Security Dealers Automated Quotations Over–the-Counter stocks that are listed in the newspaper are listed under NASDAQ Only the most actively traded are listed

12. Regional Exchanges Located in major cities List regional or local stocks List stocks on the NYSE and AMEX Increases the number of hours when stocks can be traded

13. Intermarket Trading System A video-computer system Links eight of the regional markets together New York American Boston Cincinnati Midwest Philadelphia Pacific NASD

14. Foreign Markets Enables stock trading any hour of the day or night Leading European Exchanges London Paris Frankfurt Leading Far East Exchanges Tokyo Hong Kong Singapore

15. Chinese Stocks Only a few small exchanges Open only a few hours a week Operate in Beijing Shanghai Shenyang Sell just a handful of stocks Not available to foreigners