# What do the traders on the floor of the Stock Exchange actually do in this day and age? **URL:** \ **Category:** Factual Questions\ **Created:** [October 26, 2011, 8:25pm UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900 "2011-10-26T20:25:22Z")\ **Posts on this page:** 10\ **Page:** 2
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [January 1, 2017, 10:37am UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900/21 "2017-01-01T10:37:11Z")
> [@Chronos](#): > > What happens if the prices are beyond being matched? Like, say, suppose that the seller is willing to accept any price of at least $40, and the buyer is willing to pay any price up to $45. Obviously in this case there’s going to be a deal, and somebody is going to be happy that they got a bargain, but what price is the trade made at? Midway in between? The price of whichever party put their order in first? In that case, I think [Rule 71](http://nyserules.nyse.com/nyse/rules/nyse-rules/chp_1_3/chp_1_3_4/chp_1_3_4_10/default.asp) of the [very comprehensive NYSE rulebook](http://nyserules.nyse.com/NYSE/Rules/) applies, which states: > [@](#): > > Rule 71. Precedence of Highest Bid and Lowest Offer > > (a) All bids made and accepted, and all offers made and accepted, in accordance with Exchange Rules shall be binding. > > (b) Any bid that is made at the same or higher price of the prevailing offer shall result in a transaction at the offer price in an amount equal to the lesser of the bid or offer. The same principle shall apply when an offer is made at the same or lower price as the bid. ---
**Author:** ![Nansbread1](https://avatars.discourse-cdn.com/v4/letter/n/6a8cbe/32.png) [@Nansbread1](https://boards.straightdope.com/u/Nansbread1)\ **Post date:** [January 1, 2017, 6:49pm UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900/22 "2017-01-01T18:49:53Z")
Hmmm…lots of explanations but what if Amongst all that crazy shouting and hand actions one trader says to the other at the end of the day I bought that of you? When? I did no such thing? Do you think i am an idiot?.. So who polices this and how. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [January 1, 2017, 9:56pm UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900/23 "2017-01-01T21:56:42Z")
> [@Nansbread1](#): > > Hmmm…lots of explanations but what if > > Amongst all that crazy shouting and hand actions one trader says to the other at the end of the day > > I bought that of you? When? I did no such thing? Do you think i am an idiot?.. > > So who polices this and how. There’s an arbitration procedure for disputes between members. Of course there’s always the question of evidence, as in any other dispute resolution proceeding, so you might get away once by simply denying that you did a loss-making transaction if the other party has no evidence to prove it. But you can be assured that if something like that happens with a particular firm repeatedly, others will be very wary of doing any business with them, so abusing this would be a strategy that doesn’t payoff in the longer run. ---
**Author:** ![Trom](https://avatars.discourse-cdn.com/v4/letter/t/958977/32.png) [@Trom](https://boards.straightdope.com/u/Trom)\ **Post date:** [January 2, 2017, 11:49pm UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900/24 "2017-01-02T23:49:27Z")
> [@Chronos](#): > > What happens if the prices are beyond being matched? Like, say, suppose that the seller is willing to accept any price of at least $40, and the buyer is willing to pay any price up to $45. Obviously in this case there’s going to be a deal, and somebody is going to be happy that they got a bargain, but what price is the trade made at? Midway in between? The price of whichever party put their order in first? Midway in between is a reasonable guess. I believe if there were, for example, 100k to sell and 100k to buy, it would be crossed in between the best bid and best offer on the NYSE continuous limit order book at the time of the closing bell. The NYSE also runs a completely electronic exchange called Arca. Here’s a [pdf](https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Auctions_Brochure.pdf) that provides examples of the logic Arca runs during auctions. I can’t find a paper that goes into detail on the NYSE auctions, but the logic is similar. ---
**Author:** ![Trom](https://avatars.discourse-cdn.com/v4/letter/t/958977/32.png) [@Trom](https://boards.straightdope.com/u/Trom)\ **Post date:** [January 3, 2017, 1:11am UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900/25 "2017-01-03T01:11:49Z")
> [@Nansbread1](#): > > Hmmm…lots of explanations but what if > > Amongst all that crazy shouting and hand actions one trader says to the other at the end of the day > > I bought that of you? When? I did no such thing? Do you think i am an idiot?.. > > So who polices this and how. This is known as an “out trade.” There are exchange officials on the floor and arbitration procedures. But, as \*\*Schnitte \*\*said, trying to cheat your counterparty isn’t a viable long-term strategy. Someone that seemed to always be involved in out trades would soon find no one willing to trade with them. ---
**Author:** ![Trom](https://avatars.discourse-cdn.com/v4/letter/t/958977/32.png) [@Trom](https://boards.straightdope.com/u/Trom)\ **Post date:** [January 3, 2017, 1:45am UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900/26 "2017-01-03T01:45:27Z")
> [@septimus](#): > > Interesting article. I can see why you and other traders might want closing trades \*after \*the imbalance is announced. But why do people trade at the “close” to create such imbalances in the first place? > > Trades at the opening I can understand. Any trade placed when the market is closed defaults to a “trade at the open”, right? But why do traders specify “at the closing”, especially since, as that article implies, trades at the close are likely to get a bad price if you’re on the wrong side of the imbalance _which by definition most such traders will be_? Here’s the NYSE’s [answer](https://www.nyse.com/auctions). As far as _why_ there’s so much volume on the close, it’s kind of arbitrary. There’s no reason why there couldn’t be a large auction run at 10am or 2pm. In fact, exchanges have tried to introduce intraday auctions. They just didn’t catch on. Everyone trades at the close because everyone else trades at the close. I should point out that most of the time imbalances are matched at prices very close to the current market prices and have little price impact. Also, most indices use stocks’ closing prices to calculate their index values. Thus, index funds must trade at the closing price to accurately track their benchmark. This can lead to large closing trades on the dates index changes become effective. In this [example](https://us.spindices.com/documents/indexnews/announcements/20161123-442345/442345_littellex4insteel6.pdf?force_download=true) (pdf) S&P MidCap 400 and SmallCap 600 funds would have to buy/sell the same stocks. They are concerned with getting the trade done. If they miss the closing price, they risk higher tracking error. ---
**Author:** ![Elendil\_s\_Heir](https://avatars.discourse-cdn.com/v4/letter/e/7cd45c/32.png) [@Elendil\_s\_Heir](https://boards.straightdope.com/u/Elendil_s_Heir)\ **Post date:** [January 4, 2017, 5:39am UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900/27 "2017-01-04T05:39:13Z")
Just make sure to buy lots and lots of Frozen Concentrate Orange Juice futures. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [January 4, 2017, 6:22am UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900/28 "2017-01-04T06:22:24Z")
They don’t trade FCOJ on the NYSE. You have to go down to the NYBOT for that kind of action. ---
**Author:** ![dalej42](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@dalej42](https://boards.straightdope.com/u/dalej42)\ **Post date:** [January 4, 2017, 8:07am UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900/29 "2017-01-04T08:07:11Z")
It’s actually now the Intercontinental Exchange which trades FCOJ these days > **[ICE Futures and Options | Product Guide](https://www.theice.com/products/30/FCOJ-A-Futures)** > > The FCOJ-A futures contract is the world benchmark contract for the > global frozen concentrated orange juice market. The contract prices > physical delivery of U.S. Grade A juice (with grading performed by > the U.S. Department of Agriculture), in storage... Sent from my iPhone using Tapatalk ---
**Author:** ![Trom](https://avatars.discourse-cdn.com/v4/letter/t/958977/32.png) [@Trom](https://boards.straightdope.com/u/Trom)\ **Post date:** [January 4, 2017, 6:02pm UTC](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900/30 "2017-01-04T18:02:00Z")
> [@dalej42](#): > > It’s actually now the Intercontinental Exchange which trades FCOJ these days > [FCOJ-A Futures](https://www.theice.com/products/30/FCOJ-A-Futures) > Sent from my iPhone using Tapatalk FCOJ is old hat. [Snowfall futures](http://openmarkets.cmegroup.com/4967/a-market-for-snow-how-some-businesses-use-futures-to-prepare-for-winter) are all the rage these days (well, not really). Also, ICE is actually the owner of the NYSE now. [Previous page](https://boards.straightdope.com/t/what-do-the-traders-on-the-floor-of-the-stock-exchange-actually-do-in-this-day-and-age/600900.md?page=1)