Stock Exchange | New York Stock Exchange History

When the New York Stock Exchange started, it was what is known as a call market; the names of the stocks were called out one after another. This was how it was done. Just before noon people with stock to sell, and others with money to buy, gathered and listened while an officer of the exchange read the name of the first stock on the list. Men who were interested in that stock then bought and sold it. When those transactions were finished the officer read the name of the second stock on the list, and so on until the list was completed.

Gradually the list expanded until reading it, or calling it, was no longer practical. The exchange built a building called a trading floor and in 1871 changed the rules and methods so that trading in all the stocks would go on all the time that the exchange was open.

The method they came up with was, with minor changes, the one in use today. It featured "trading posts" spaced at intervals around the trading floor. Certain stocks were assigned to each trading post. Those interested in buying or selling one of those stocks could seek out that post, find others interested in the same stock, and complete their business.

The hour that trading was to start was changed to 10:00 A.M. The closing hour was set at 3:30 P.M. For the most part those hours have remained the same, the most notable change from this being a period which ended in 1970 when the closing hour was moved forward to shorten the trading day and give brokerage house bookkeeping departments time to cope with the tremendous and unexpected volume of business which had developed.

Thus the NYSE became an auction market instead of a call market, and has remained one ever since. By "auction" is not meant the type of sale where an auctioneer stands in front of a crowd receiving higher and higher bids until no more bids are forthcoming and he "knocks down" the article to the highest bidder. This is the type of auction where men standing around a trading post shout out the prices they are willing to give or to accept for a stock, and by compromise come upon a price satisfactory to both buyer and seller, usually just a little higher than offered and a little lower than asked.