Chapter 2 The Financial Market and Interest Rates Chapter Objectives

Over-The-Counter Markets — All security markets except the organized exchanges

Money Market

Organized Security Exchanges and Over-the-Counter Markets

• The business of an Exchange, including securities transactions, is conducted by Members.
• Officer of the firm is designated to be the “Member” of the Exchange, which then permits the brokerage house to use the facilities to effect trades.

Stock Exchange Benefits

• Provides a continuous market
• Establishes and publicizes fair security prices
• Helps businesses raise new capital

Listing Requirements

• Listing criteria varies for each exchange.
• General requirements include:
• Profitability
• Market Value
• Public Ownership

New York Stock Exchange (NYSE)

• “The Big Board”
• Origins back to 1792.
• Automated in 1995 using wireless hand held computers (HHC).
• As of Jan. 24, 2007 all stocks can be traded using HHC.
• 1366 seats on the exchange
• In 2005, seat sold for $3.25 million.
• Operated by NYSE Euronext
• Acquired American Stock Exchange (AMEX) in Oct. 1, 2008