Financial Management - Essay Example

Financial Management The NYSE Euronext The New York Stock Exchange Euronext (NYSE Euronext) is Euro-American Company that was formedas a result of a merger of the NYSE/New York, Euronext/Paris and NYSE Arca. This organization was launched on the 4th of April, 2007 and its headquarters are in New York and Paris. The major activities of the company are cash equities, equity indexes, market data, bonds, and options and futures on interest rates. Currently, the corporation has the largest cash equities exchange in the world of stock exchange.

The company has been a noteworthy performer in the business for very many years according to statistics, maintaining the top three positions since 2009. The company continues to be on the rise according to the FIA report of 2010. The report that was published on March 2011 reveals that contracted traded in NYSE Euronext experienced a rise of 24.6% in the FY2010 to reach 2.155 contracts (Heckman, 2009)The NYSE is the world’s largest company in terms of cash equities exchange. It has been in operation for about 215 years, and its dealings are in capital formation, whereby the company serves institutional and individual investors, the trading movement and its listed companies.

By the end of 2006, over 2700 users (operating companies, exchange traded funds and closed end funds) were listed in the corporation. These listed companies represented the global market capitalization of over b$25 trillion. Ever since, the company has enhanced its reputation in cash equities exchange. As compared to the rest, Euronext is an extremely new financial entity, which was formed in 2000 (Brigham, 2009).The governance of NYSE Euronext is by a board of directors that is elected manually.

A majority of these directors are independent while the rest of the team comprises of a CEO, deputy CEO, non executive chairman and deputy chairman. The markets of the company are regulated according to local requirements. When the merger was done, it was agreed that there would be no additional requirements for all the listed companies. This was to guard the company from American Law especially, the Sarbanes-Oxley Act.The Sarbanes-Oxley ActThe Sarbanes-Oxley Act of 2002, also known as the Public Company Accounting Reform and Investor Protection Act is an enactment of 2002 is a federal law that governs corporate finance.

The law was enacted after many high ranking companies including WorldCom and Enron were implicated in corporate accounting scandals. The Act brought reform into American business and enhanced criminal penalties for any company that destroys, falsifies, fabricates or alters financial records (Heckman, 2009). Therefore, the Act would ensure that the confidence of the public would be restored after the aforementioned scandals, and, hence, offers protection to investors. This Act has, thus, ensured that there is enhanced accuracy, transparency and quality in financial reporting.

However, the Act stipulated that companies ought to respect prompt financial analysis of their financial procedures and publication of all their financial results. This proved unfavorable for companies like the NYSE.NASDAQ The National Association of Securities Dealers Automated Quotations (NASDAQ) is a stock exchange corporation that is wholly electronic. Even though NASDAQ has the largest trading volume in the global market, the NYSE is considered the largest stock exchange company because it has a far more superior market capitalization.

Just like the NYSE Euronext, NASDAQ is one of the world’s largest stock exchange companies. The company started trading in 1971, and at this time, it was the world’s only electronic stock exchange corporation. Currently, it has approximately 3300 company listings, and currently, it has surpassed the NYSE in terms of the number of shares traded daily. Statistics reveal that, by the end of December, total market capitalization was over $3.1 trillion. Unlike the NYSE, NASDAQ is wholly electronic in that it does not have a physical trading building.

All its trades are made through a tele-communication system and a computer. However, in order to create physical presence, NASDAQ built the NASDAQ MarketSite in Times Square, New York. This tower has an electronic display that displays information current financial information for a period of 24 hours. Another difference in the two stock exchanges lies in the criteria used to list the company in the stock market. For example, in NASDAQ, for any company to be listed, it must be able to maintain a stock price of not less than $1, and total outstanding stocks must be more than $1.

1 million (Brigham, 2009).ReferencesEugene F. Brigham, J. F. (2009). Fundamentals of Financial Management. Connecticut: Cengage Learning.Heckman, L. (2009). the University of Michigan. London: Routledge.Ingebretsen, M. (2008). Nasdaq: a history of the market that changed the world. Michigan: the University of Michigan.Ingebretsen, M. (2009). Nasdaq: a history of the market that changed the world. Michigan: the University of Michigan.Market, N. S. (2008). Nasdaq: the stock market for the next 100 years.

New York: The Nasdaq Stock Marke.