I understand how supply and demand works but I’m confused as to who actually is in charge of setting the price to display to all trading platforms. Since the stock price is constant across all trading platforms, what algorithm or system is in place to ensure there are no clashes or discrepancies between said platforms? Is there one dominating platform that monitors all stock prices which other platforms refer to such as the NYSE?
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The way quoted prices are determined is simple: whatever was the price paid in the most recent trade.
If I see Microsoft quoted at $330, that means the last trade was at $330. If I peer more carefully into my trading platform, I might see a bunch of offers to buy, at (maybe) $330, and also a bunch of prices lower than that. I’ll also see a bunch of offers to *sell* at *higher* prices.
As long as the sellers are all demanding higher prices than the buyers are offering to pay, then no trade takes place. But then maybe I come along, and say “I want to buy 10 at $330.05”. Well, someone’s already offered (let’s say) to sell 8 at $330.05, so as soon as I make my bid, the trade takes place – I get 8 of the 10 shares I want, the remaining 2 go on the list of “offers to buy”, and the quoted price of Microsoft shares is now $330.05.
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You asked how different trading platforms manage to get the same price. They do this, because they are all getting price information from a single source – a stock *market*. Example markets include the NYSE (New York Stock Exchange), NASDAQ (whatever that stands for), and there are also international markets (Euronext, Japan Exchange Group, Hong Kong Stock Exchange, London Stock Exchange etc)
Usually, a company is only listed on one exchange, but sometimes it is listed on more than one. For example, Air New Zealand is listed on both the Australian and New Zealand stock exchanges.
Then, your question “how do they make sure the prices are the same” has an interesting answer. They don’t, because they don’t have to do anything. As soon as the prices diverge, some smart investors will take advantage of the fact that they can buy shares in one market, and sell them at a higher price in the other. As they sell and buy, it pushes the prices towards each other, and so the prices in different markets tend to stay in step.
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