A trading floor refers to a physical location where securities trading takes place, either at a securities exchange like the New York Stock Exchange or within the offices of financial firms. Traditionally, trading was done via open outcry with traders shouting orders, but electronic trading has now largely replaced this method. While some trading floors still exist like at the NYSE, their role has diminished as most transactions are now done digitally nearly instantly through computer networks.

1. M Syed Shameel, Asst Professor
ISLAMIAH COLLEGE (AUTONOMOUS)

2.  A trading floor refers to a physical area
wherein trading activities in financial
instruments, such as equities, fixed
income, futures, options, etc., takes place.
 Trading floors are situated in the buildings of
various exchanges, such as the New York
Stock Exchange (NYSE) and the Bombay Stock
Exchange (BSE). Trading floors may also exist
as the center of trading activity within a
financial firm such as an Stock Broker,
investment bank or mutual fund.

3.  A trading floor is a physical location where
securities trading and related activities take
place.
 Trading floors may be located at sites of
securities exchanges (e.g., the NYSE) or as
centers of trading activity within financial firms'
offices.
 Open-outcry was the primary trading method
used on trading floors before the rise of
electronic trading.
 Today trading floors still exist but are limited in
their scope and capacity as they have been
replaced by screens and algorithmic trading.

4.  The trading floor is composed of pits on an
exchange. This is because the trading floor was
somewhat circular with steps recessed into the
floor, where traders had to step into the arena to
conduct their transactions. Factor in the hectic,
frenzied nature that accompanies this type of
activity, and one can see that the moniker is
quite descriptive.
 Many different types of traders could be found
on trading floors. The most common are
the floor brokers, who are tasked with trading on
behalf of clients. Other types of traders include
hedgers, scalpers, spreaders, and position
traders.

5.  Brokerages, investment banks, and other
firms involved in trading activities can also
have their own trading floors. In these cases,
the trading floor refers to the physical office
location that houses the trading division,
which can complete transactions over the
internet or telephone.

6.  The NYSE trading floor is located at 11 Wall
Street in New York City and has been in its
current location since 1865. The exchange
installed telephones in 1878, which provided
investors with direct access to traders on the
NYSE trading floor. Today, most of the
transactions that take place on the trading floor
are automated and execute in less than a second.
A bell is rung on the trading floor to signal the
opening and closing of each day’s trading.
.

7.  In an era where trading floors are becoming a
relic of the past, the NYSE announced in 2017
that it would allow all U.S. stocks
and exchange-traded funds to trade on its
trading floor, increasing the number of
securities that could be traded on the trading
floor from roughly 3,500 to about 8,600. This
expansion was completed in the first half of
2018

8.  BSE, the first ever stock exchange in Asia
established in 1875 and the first in the
country to be granted permanent recognition
under the Securities Contract Regulation Act,
1956, has had an interesting rise to
prominence over the past 143 years.

9.  The open outcry was the primary trading
method used on trading floors before the rise
of electronic trading.
 The method uses verbal and hand signal
communications to convey information, such
as a stock’s name, the quantity the broker
wants to trade, and the desired price.

10.  While trading floors are paradigmatic of
securities trading, they have been largely
replaced by computer screens, electronic
markets, and algorithmic trading.
 Instinet was the first major electronic alternative
to the trading floor, arriving in 1967. With
Instinet, clients (institutions only) could bypass
the trading floors and deal with each other on a
confidential basis. Instinet was a slow grower,
not really taking off until the 1980s, but has
become a significant player alongside the likes
of Bloomberg and Archipelago (acquired by the
NYSE in 2006).

11.  Given the benefits of the electronic systems and
the clients' preference for them, a very large
percentage of the world's exchanges have
converted to this method. The London Stock
Exchange was among the first major exchanges
to switch, making the conversion in 1986.
The Borsa Italiana followed in 1994, the Toronto
Stock Exchange switched in 1997 and the Tokyo
Stock Exchange switched to all-electronic trading
in 1999. Along the way, many major futures and
options exchanges have likewise made the
switch.

12.  The trading on stock exchanges in India was
in open outcry manner till mid 1990s.
 In order to provide efficiency,
liquidity and transparency, NSE introduced, a
nationwide, on-line, fully-automated Screen
based trading system (SBTS) in November
1994 known as National Exchange for
Automated Trading (NEAT) system.
 BSE online trading (BOLT) by BSE started in
March 1995

13.  NEAT and BOLT are state-of-the-art client-server
based applications where at the server end all
trading information is stored in in-memory
databases to achieve minimum response time
and maximum system availability for users.
 A member, broker enter orders from the Trader
Work Stations (TWSs) installed in their offices.
 A client of these broker can place orders through
phone/internet for which he should enter Model
Agreement with brokers first.