How does wall street work, and why does it seem so messy...? ?

Question

it seems like there should be a bit more organization when dealing with so much money...?

Answer 1

Nah, the Soviets tried this with communism. Didn't work out too well for them.

Answer 2

If you mean the stock exchange it is really pretty simple.  The NYSE operates on an open call auction system.  If you want to buy or sell you contact your broker.  Your broker then goes to the specialist in the stock you want to trade and call out the price he/she is willing to pay/sell for.  If the other parties broker has been authorized to meet your price a deal is made.

If you mean the investment bankers they make their money via private placements, financing mergers and acquisitions, taking companies public and so on.  So, if you are running a corporation and need a few million (or a few hundred million) you contact your friendly investment banker and figure out the best way to raise the money.  The banker then handles everything for a nice commission.

Then there is the clearing house.  When stocks are traded the clearing house arranges the transfer of the physical stock certificates and for the appropriate entries to be made in the corporations stock register.

Hope this helps

Jerry-the-bookkeeper