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If you were asked to name an institution that could not be shut down for a month without wreaking havoc all over the country, what comes to mind?
Did you have the stock market or the bond market (securities exchanges) in mind? Without the security exchanges, our economic system would be in big trouble. Think about it. Our federal government already, $5 trillion in the red, would not be able to sell T-bills and T-bonds to pay its bills.
Without the securities exchanges in the United States, corporations such as McDonald's, Disney, Coke, and Bank of America, would have major problems running their businesses. Even foreign companies such as Sony, Toyota, and Minolta would have to stop shipping their products. Most of the public companies, large or small, domestic or foreign, raise money to pay their bills and to develop their businesses by selling stocks, bonds, and the like in the securities exchanges.
If we shut down the financial market, factories would send their workers home, offices would close, and banks would run out of money. America would no longer be the capitalistic society that we know it as. Although you may not have noticed, the securities exchanges are a very important part of our society. Life can’t move on for long without them.
The New York Stock Exchange (NYSE), the oldest and most prestigious stock exchange in the world, is also known as Wall Street because it is located at Wall Street in New York City. You often see it on TV, a gigantic floor with computer monitors and busy people running around, waving their hands, and writing in notebooks. The NYSE is a matchmaking place for stock transactions. The people running on the exchange floor are the matchmakers and are called specialists. They are the ones who execute your buy or sell orders on the exchange floor. Most established companies list their stock in the NYSE. IBM, GE, GM, and AT&T are just a few.
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Another large stock exchange is called NASDAQ, which stands for the National Association of Securities Dealers Automated Quotations System. It is pronounced "nazzdack." Technically, NASDAQ is a computer network without a trading floor like that of the NYSE. The NASDAQ "matchmakers" normally sit at computer terminals at their offices around the country, unlike the matchmakers of the NYSE on a huge trading floor. Your sell or buy orders are executed through the NASDAQ computer networks.
When NASDAQ was founded twenty-six years ago, it was a trading place for small companies. Now, NASDAQ is growing fast, its volume of transactions surpassing the NYSE on many trading days. Today, high-tech companies, like Microsoft, Netscape, Intel, MCI, Sun Microsystems, and Apple Computer, list their stocks in the NASDAQ.
Additionally, there are more securities exchanges such as American Exchange (AMEX) and the other ones around the world. For more information, click here.
Of course, you cannot just walk onto the NYSE trading floor or hook up to the NASDAQ computer networks to buy or sell stocks. You need a stockbroker.