What are people in the stock exchange buildings shouting about?
In: Economics
Although the practice is a bit outdated, the old stock exchange buildings were quite literally markets with traders buying and selling on the floor. They’re literally shouting their offers and acceptances of trades.
What typically happens in many stock exchanges is that it is hard to match orders – ie someone wants to sell 10, another one wants to buy 100, another one wants to sell 1000 etc etc. So the exchange appoints “market makers” – basically a broker who is sort of responsible to help clear trades for that particular stock/share.
In the past, before all the electronics and internet, if someone wanted to trade a relatively small amount of, say IBM, they’d contact their broker and their broker would have a representative on the floor of the exchange go to the IBM market maker and try to complete the trade in person. Multiply this by 100x and 1000 different stocks and you have lots of people shouting. (It is a bit more complex than this but this should be enough of an ELI5)
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