A ticker symbol is a series of letters which identify a publicly-traded security, such as a stock or mutual fund. Often the symbol is an abbreviation for the company, such as K for Kellogg Company, DE for Deere and Company, WMT for Wal-Mart and AMZN for Amazon. When a company first begins to issue securities to the public, it chooses an available ticker symbol which investors use to place orders.
Identification
Stocks on the oldest exchange, the New York Stock Exchange, use one, two, or three letters. Those on the American Stock Exchange use three letters, and those on the National Association of Securities Dealers Automated Quotation system use four letters.
History
Ticker symbols date back to the 1800s, beginning with Samuel Morse's invention of the telegraph in 1837. Stock trade information could now be transmitted throughout the day, and abbreviated symbols were assigned to accommodate the extremely narrow bandwidth provided by the telegraph. The first stock price machines printed the changes in price on a narrow strip of paper at about one character a second. People called the paper a ticker tape because of the ticking sound it made as it printed, and referred to each price movement as a tick.
Function
The terms are still used today, with upward price movements called upticks and downward ones downticks. The ticker tape now runs electronically across the bottom of television screens on news and financial channels, showing price movements along with volume. Stocks trading with the highest volume are shown most often. Bandwidth is no longer an issue, but the stock ticker is used to save space and as a convenient and traditional way to identify a company.
Significance
A new company can claim an older symbol if one becomes available. For example, when Daimler and Chrysler merged in 1998, they became DCX, which freed up Chrysler's C ticker symbol. That symbol was chosen by Citigroup, which had recently been created by a merger of Citicorp and Travelers Group. When a company is moved from one exchange to another, it must choose a new ticker symbol or claim an available one which was previously used. In 2008, the one-letter symbols I and M are being reserved in anticipation that Intel (INTC) and Microsoft (MSFT) stock will soon be moved from NASDAQ and traded on the NYSE.
Features
Although actual paper ticker tapes were dispensed with in the 1960s, urban parades with lots of confetti are still called ticker tape parades. The first ticker tape parade was a spontaneous celebration in 1886, when people in New York, N.Y. tore up ticker tapes and threw the confetti out the windows, after the dedication of the Statue of Liberty. Now the parades mostly use shredded office paper and newspaper.
Tags: ticker tape, ticker symbol, Exchange three, Exchange three letters, moved from