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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There is no algorithm, and no “one” sets the price. All the prices for each transaction are separate. The sum total of all of the specific trades that happen at a given moment (really, a bit longer) result in the published price. Technically the price you see in real-time should reflect the value of the last trade but so many are made at every instant for most stocks that it might not reflect exactly that latest trade.
The biggest & most active traders are monitoring all of these trading platforms simultaneously and trying to figure out when it might be profitable to buy/sell on one, based on the price on the other one – in addition to doing that analysis for any one specific platform. For the rest of us – a huge fraction if you look at the number of entities trading, but an incredibly tiny proportion of the value of all trading based on the $ amount traded – we see what we see when we see it and make decisions to buy/sell. In essence, the market has moved on in that interval.
Other comments are absolutely correct that the trade transaction price reflects exactly the value that two entities (not necessarily people) who each feel they got the better end of that particular deal. Would you make a trade if you didn’t think you were getting a good deal?
Yes, some marketplaces or “exchanges” see many more trades made than others – for example the NYSE is one of the biggest – and there are many where any entity can choose to trade. One interesting aspect is that each market has different regular hours so that when the NYSE is “closed” the Tokyo Nikkei is open. It’s not quite that simple but you get the idea.
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