MAPPING A TRADE AT NYSE & NASDAQ –CHANGES THROUGH TIME

Michael Ahearn

April 2011BA 543: Financial Markets

STOCK MARKET BASIC HISTORY

1793: Buttonwood Agreement –Start of NYSE 1867: 1st Stock Ticker –Revolutionizes Stock Market 10/29/1929: Black Tuesday –DJIA Falls ~11%, Start of

Great Depression 1971: NASDAQFormed -1st ElectronicStock Market Sept. 2008: LargestCrash In History –DJIALost ~21% In A SingleDay

OUTLINE

Extended History Of NYSE & NASDAQ Last 11 YR’s Tech History Differences Between NYSE & NASDAQ Mapping A Trade Video Q&A

STOCK MARKET HISTORY (1 of 3) 1907: Panic of 1907 Triggered by Rumors & Bank Runs 1913: Federal Reserve System Created 1914: WW1 1920: Centralized Clearing System Established 1929: Central Quote System Established 1933: Securities Act of 1933–Mandates DisclosureRequirements

STOCK MARKET HISTORY (2 of 3) 1934: Securities Exchange Act establishes SEC to prohibit

fraud 1966: Quote Data Is Fully Automated 1968: Central Certificate Service (CCS) is Created 1975: Fixed Commissions Abolished –Resulting in

Brokerage Consolidation 1976: Designated Order Turnaround (DOT) Established 1978: Intermarket Trading System (ITS) is Inaugurated 1984: Super Dot 250 Launches 10/19/1987: The Crash –DJIA drops 22.61%

STOCK MARKET HISTORY (3 of 3) 1988: Circuit Breakers Introduced 1991: NYSE begins off-hours trading 1995: High Tech Trading Post Upgrade 1996: Real-Time Tickers Introduced 1997: Trading In Sixteenths 1999: NYSE Unveils 3D Trading Floor 09/11/01: Terrorist Attack WTC –NYSE Closes For 4

Days 09/17/01: DJIA Drops 684.81 Points (2nd biggest drop) 2002: Sarbanes Oxley Act

NYSE TRADING FLOOR

LAST 11 YR’S TECH HISTORY (1 of 2) TECHNOLOGY RAPID CHANGE

2000: New Trading Facility Opens w/ Latest Display Technology & 1st NYSE ETF

10/21/00: NYSE Direct+® 01/29/01: Decimal Pricing for all NYSE Stocks 01/24/02: NYSE OpenBook® 12/15/05: NYSE Hybrid Market Launched 12/30/05: Member Seat Sales Officially End 10/10/06: Options Trading Platform Launches 11/10/06: NYSE BondsSM -New Bond Trading Platform June 2008: Algorithmic Trading Starts

LAST 11 YR’S TECH HISTORY (2 of 2) TECHNOLOGY RAPID CHANGE

06/24/08: NYSE Launches Realtime Stock Prices 10/24/08: SpecialistsDesignated Market Makers(DMM) Dec. 2008: 1st Migration toward NYSE Euronext’s

Universal Trading Platform (UTP)

NYSE vs. NASDAQ Trades Occur Physically

On The Trading Floor In NYC.

Auction Market (AKA Order-Driven), Day’s Open Price Is Determined By An Auction.

Traffic Control Is Conducted By Specialist.

Well Established Blue Chip Firms

More Stable

• No Physical Location, Purely Electronic Market.

• Dealer’s Market (AKA Quote-Driven)

• Traffic Control Is By Market Makers Who Act As Intermediaries Who Quote The Price

• Known As The High Tech Market.

• More Volatile & Growth Oriented.

VIDEOS

Minyanvill "Goldman Sachs Bailout“

Minyanville "Short Selling"

Q&A

Thanks You, Michael Ahearn