Question

List and Explain important features of the New York Stock Exchange. What is meant by electronic trading systems, or electronic crossing systems.

 

Answer 1

The primary feature of the New York Stock Exchange (NYSE) is that it makes use of a unique market model. This model appropriately integrates state of the art technology with human judgment. The objective of this integration is to focus on the process of price discovery for the companies listed in NYSE. The combination of human insight and accountability with the speed of technology enables NYSE to deliver lower volatility, higher liquidity and as a result improved prices.

Secondly NYSE makes use of Designated Market Maker (DMM). The DMMs have an obligation to ensure fair and orderly markets for those securities that are assigned to them. DMMs ensure better prices, lower volatility and enhanced value.

Thus the important features of NYSE is its open process and open price. Through the open process auction can be done with DMM, underwriter, and stabilization agent. This leads to better control over time and price. Open price is optimized by coordination of DMM, underwriter, and stabilization agent with floor community.

Electronic trading system is the system or the process of conducting stock market transactions by making use of an electronic platform. The electronic platforms transfer the buy and sell orders to a person who in turn completed the order. NYSE’s electronic trading system is called ‘NYSE Direct’.