International Marketing Study Program 2000
New York Stock Exchange
24 January 2000
Today, we visited our first scheduled company in New York, the New York Stock Exchange. During our visit, we had the opportunity to listen to Mr Murray Teitlevaum from the Board of Education.
Background and Structure
Briefly the company structure of the NYSE consists of 26 members:
- 12 public directors
- 12 individual directors
- a Chairman
- a President
Both the Chairman and the President are elected by the 24 directors who are elected by members of the trading floor.
Company Operation
The NYSE believes in the principle of offering or getting the best price if all transactions are conducted at one place - one focal point.
Thus, the NYSE brings together brokers (there are three types of brokers: independent, commission and specialist) and dealers (ie. over the counter dealers or NASDA) with differing needs (eg. liquidity requirements).
The NYSE marketing department is responsible for searching for prospective companies to add to their existing listings. Listing fees include:
- Initial listing (the largest cost)
- Listing service (due each January and depends on the company size)
- Cost for use of equipment on the selling floor
In terms of competition, the major listing competitors come from China, South Africa and other Asian countries, which actually represent an opportunity for market expansion for the NYSE. In New York itself, the NYSE has expanded its trading floor space to include J. B. Morgan, in order to increase the number of transactions and their income.
The Trading Floor
After the presentation by Mr Teitelvaum, the group went for a tour of the NYSE trading floor.
The trading floor is characterised by the vast amount of transactions, numerous extremely busy people who need to make fast and accurate decisions and who wear different coloured uniforms.
The technology used on the trading floor is called Super DOT (Digital Order Turnover). In terms of going global, other than ensuring efficient and effective transactions, the NYSE is planning to use technology to further reach households (which remains to be a big potential) and to solve the global timing difference issue (ie. via the internet).
In ensuring integrity and fairness, NYSE is highly regulated by its own market surveillance to ensure that there is no illegal trading, and to prevent a party from making large profit, due to any market disparity.
In the case of a market crisis, NYSE reserves the right to suspend any trading, until such time in which the value of the commodity (eg. Shares, etc.) is in normal equilibrium from the realisation of demand and supply forces.
Written by Adi Hartono
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