LYCOS RETRIEVER 
New York Stock Exchange: Nyse Euronext
built 628 days ago
[F]rom the 1980s on, the NYSE faced growing competition by off-exchange trading in NYSE-listed securities. Customers were increasingly drawn to so-called third-market firms for several reasons: they had no exchange fees to pay, they outperformed regional exchanges, and they could execute orders at incredible speeds, often within seconds. Yet critics cited important disadvantages as well: third-market firms permitted their brokers/dealers to funnel order flow to sources of liquidity that might undermine the primacy of the investor and the capital raising function. In an April 1993 hearing on the future of the Stock Market, NYSE CEO William Donaldson defended the Exchange against the encroachment of dealer markets. He noted that 'the fragmented nature of dealer markets combined with flexibility in the time a trade can be reported makes trade reporting in the dealer market inherently unreliable.' Praising the NYSE's combination of computer automation with on-floor communication, Donaldson added that 'It's only at the point of sale where we believe that human intelligence and competitiveness must be brought together in executing an order.'
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There is one specific location on the trading floor where each listed stock trades. Exchange members interested in buying and selling a particular stock on behalf of investors gather around the appropriate post where a specialist broker, who is employed by a NYSE member firm (that is, he/she is not an employee of the New York Stock Exchange), acts as an auctioneer in an open outcry auction market environment to bring buyers and sellers together and to manage the actual auction. They do on occasion (approximately 10% of the time) facilitate the trades by committing their own capital and as a matter of course disseminate information to the crowd that helps to bring buyers and sellers together. Most of the time natural buyers and sellers meet in a market that provides efficient price discovery in an auction environment that is designed to produce the fairest price for both parties. The human interaction and expert judgment as to order execution differentiates the NYSE from fully electronic markets. However, in excess of 50% of all order flow is now delivered to the floor electronically.
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(The market value requirement is subject to adjustment, based on the NYSE Composite Index of common stock prices. The base in effect as of December 31, 1991 is the Index on July 15, 1971 [55.06]. The Index as of January 15 and July 15 of each year [if lower than the base] is divided by the base, and the resulting percentage is multiplied by $40 million to produce the adjusted market value standard. The adjustment formula is used only when the current index is below the base.)
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In 2007, NYSE Euronext's U.S. and European equities markets attracted more initial public offering (IPO) proceeds than any other exchange group, according to preliminary year-end data. IPOs on NYSE Euronext markets raised a total of $78/€53 billion in proceeds, including closed-end funds.
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Auction-market trading means that stock prices are set largely by a throng of traders in an area the size of a football field, where the opening and closing of the day's action is punctuated by the NYSE's famous bell. Prices are determined through supply and demand. Stock buy and sell orders funnel through a single location, ensuring that the investor, no matter how big or small, is exposed to a wide range of buyers and sellers.
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On average, a trade via the auction system takes 12 seconds, vs. three-tenths of a second to trade electronically via the NYSE's new handheld trading devices. Trades via Archipelago take less than a quarter of a second.
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Nyse Euronext