NYSE---Monday
What an incredible day---a once-in-a-life time day for me---two hours on the floor of the NYSE after the close of trading. Tomorrow we will be on the floor during trading.
We (21 teachers and 5 Stock Market Game coordinators) met at 8:00 a.m. at the corner of Broad and Wall Streets. A person from the NYSE Education Department greeted us and took us through security and up to the 6th floor. Our meeting room is behind the Club dining room. We walked past the original bronze Bull and Bear in the lobby of the dining room.
The hall and the dinning room is all great dark wood, high ceilings, and tall windows. Impressive.
Upon arrival in our meeting room we had a continental breakfast then settled in for the morning's presentations.
We heard about the NYSE Governance structure, the Board and board committees, from Darla Stuckey. The new Board is an independent one. It is composed of 24 Board members elected for one year terms. A Board member may not be a member of the Exchange. The Board meets 6 times a year and its members are paid $60,000 for their services. Most Board members opt out of being paid---they are highly successful business people who give of their time and expertise.
Next, we heard from Steven Fuller who discussed membership on the Exchange. There are 1366 seats on the exchange. The number has remained constant since 1953. Of the 1366, 487 are specialists (from 7 firms) and 879 are brokers (480 commission floor brokers (Merrill Lynch, Smith Barney types) and 399 independent brokers). Independent brokers conduct trades for floor traders that may have more orders than they can handle at the moment. They also trade for customers off the floor; they cannot trade for themselves. Each seat or membership equals one person on the trading floor. Because of the amount of business Merrill Lynch transacts, it owns 25 seats on the Exchange.
The most recent seat sold for $1.4 million. A more recent development is the leasing of purchased seats on the Exchange. Currently, 900 seats are leased. Owners expect to make 10 to 14 percent of their purchase price. The leased price has ranged from $360,000 to $165,000 (today) per year.
The Exchange has added 7 Registered Competitive Market Makers (RCMM) who can trade for themselves on the floor of the Exchange. They hold their own portfolio and can also trade for their own customers. An additional type of new membership is an Electronic Access Member. Currently there are 27 such members. They access the floor through the DOT system or through a floor broker. Their membership fee is $142,000. This brings the total membership of the NYSE to an "unofficial" 1400.
Paul Bennett, Senior Vice President of Research and Statistics spoke to us next about the NYSE as a business.
Some interesting statistics from Paul:
- NYSE trades 80 percent of the volume and the Nasdaq, 20 percent
- On the NYSE 10 percent of the volume is totally electronic (non-human)
- Value of publicly traded companies in the U. S is 15.2 trillion.
- NYSE lists $11.3 trillion and the Nasdaq, $3.9 trillion
The NYSE is a business, a club, a regulator and a private company. If publicly traded, it would qualify as a small to mid-cap company. Its revenues in part, come from regulation fees, trading fees (1/4 cent per share traded on the floor to cover costs of building and trading), and listing fees. Companies pay an initial listing fee and an annual fee. The annual fee is based on a per share amount. Large companies might pay $400,000 and small companies as little as $10,000 a year. Currently, 2,742 companies are listed on the NYSE. Of that total, 461 are foreign companies. The Sarbanes-Oxley regulations are presenting a stumbling block for foreign companies to list on U.S. exchanges.
Tom Veit, Senior VP of Listings told us about listing companies. Something I hadn't considered---the amount of competition between the NYSE and Nasdaq to obtain listings (I've always looked at it through the company's eyes as trying to get listed on the NYSE---Would the NYSE accept the company for listing.). It's not only about obtaining listings but also about keeping listed companies happy. The Exchange offers a number of services for its listed companies. One service is enhanced visibility. The Exchange can help arrange meetings for the company with a whole room of analysts and media here at the NYSE.
The NYSE has a listing marketing department. "Salesmen" go out to sell NYSE listing to companies who are considering going public. They get many of their leads through their networking with investment bankers. Currently, the number of new listings is down significantly. In 1993 there were 306 new listings, in 1997, 279 new listings; in 2002, 103 new listings; in 2003; 36 new listings; and so far in 2004, 63 new listings. During the past two years companies have been financing their expansion internally rather than going public.
After an excellent buffet lunch provided by the NYSE (because of security it was totally impractical to leave the building or even change floors for that matter) in our meeting room, not in the Members Club dining room, Murray Teitlebaum, head of education services, discussed the capital raising function of going public and the going public process. Later we shared what and how we teach stock market information..
At 4:30, as soon as the market closed, we went down to the floor of the Exchange. For me, it was truly awesome to actually be on the floor of the Exchange.
The Floor Supervisor who had our group of five took us everywhere on the floor. We saw "up close and personal" the four trading floors---the main room (built in 1865) with the opening bell podium, the garage (1920), the blue room (1960) and it is painted blue, and the new room (2000). Its new design will be implemented in the other rooms as they are updated. We got to look closely at the broker's booths around the perimeter of each floor, talked to a broker who was working late, and spent a lot of time learning about the details of a trading post. It was a great tour. Our Floor Supervisor spent an hour and a quarter with us. Everyone else received only 30 minute tours. It was nearly 6:00 when I left the Exchange. What an incredible day! It was back to the hotel for a Bloody Mary and dinner.
8:29:31 PM 
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