Sunday, 11 January 2015

What Is A Stock Symbol & Why Does A Company Need One

A stock symbol is a short identifier for a company publicly traded on an exchange. It is used by investors to identify a company's common stock on a market. Based on the region of the world, different characters and names are used for a stock symbol.


History


Stock symbols were used by telegraph operators when transmitting stock ticker quotations in order to save bandwidth. In the United States, stock symbols are often referred to as ticker symbols, referring to ticker tape, where stock prices were once quoted.


Stock Symbols in North America


Stocks in North America use one to four characters from the Aramaic alphabet. Often times the stock symbol is a shortening of the company's name, as in the case of Walmart (ticker: WMT). Other times, it represents a product the company makes or an image it wants to convey, such as US Airways (ticker: LCC, standing for Low-Cost Carrier) or Southwest (ticker: LUV).


Stock Symbols in Europe


Most European countries that use the Aramaic alphabet use it for trading. Many countries and companies use the North American model of shortening the name, such as in the German Case of Siemens (ticker: SIE).


Stock Symbols in Asia


In Asia, stock symbols are a combination of numbers and/or the Aramaic alphabet.


One Letter Symbols


The most coveted ticker symbols are one letter symbols. Some notable companies such as Visa, Ford, and AT&T have such a symbol. On the New York Stock Exchange, only H, I, J, P, U, W, and Z have been taken.

Tags: Aramaic alphabet, stock symbol, North America, Stock Symbols, ticker Stock