How does the new york stock exchange work? and why are they doing on the floor running around?

Question

How does the new york stock exchange work? and why are they doing on the floor running around?

Answer 1

The NYSE is a (partly) physical exchange.  This means that there are traders and market makers/specialists on the floor who trade in any of the numerous listed securities.

The traders and specialists are the ones who are just standing around the trading posts, yelling at one another, talking on the phones, and keeping an eye on any and all news that might affect the value of a company.  The people who are running around on the floor are called "runners" (go figure!).  Their job is to take orders from clients of the firm that they work for, and give them to the traders, so the traders can buy or sell based on the orders that their bank is receiving.

Answer 2

Several thousand stock brokers from several hundred companies are open to get people to buy and sell stocks. Those orders are funneled into the exchange members to execute. The traditional methods are essential matching. Sell 200 XYZ at market, sell 300 at y, sell 400 at z are matched with Buy 300 XYZ at market, buy 100 at y, buy 200 at z. Already we have 200 shares traded at the last price, 100 traded at whatever price y was, and 200 at whatever price z was, so what is left remains, so whichever is closer y or z becomes the next market price.

I've sometimes noticed that when I make a trade on Scottrade that it happens almost instantaneously. That is the electronic matching done within the broker's own set of books. The computer said another customer was selling what I was buying, or vice versa, so it never made it to the exchange ticker because the sale never made it to the exchange.

As for the guys running around, some are couriers, taking new orders to traders, taking news of executed orders back to the traffic desks. Then there are those who are market makers when the prices like y and z are too far apart. So they may buy something just to get things moving, selling it again after the pause in trading has ended.

Now if you want to see some chaos, check out the commodity exchange pits, but you better hurry because they (like the NYSE) are getting automated pretty quickly.

Answer 3

The people running around are buying and selling stocks.