Ticker symbols or stock symbols are unique codes or identifiers assigned to the stocks traded on exchanges for the purpose of identification and simplification of the process of trading . Ticker or stock symbols help us to identify a security anywhere, in exchanges or in TV or newspapers.
History suggests that in the United States, ticker symbols were developed by Standard & Poor's (S&P). A company having different tickers in different stock markets caused a huge deal of confusion for investors. This was later standardized by SEC. However, we still do not have uniform ticker symbols for preferred stocks. It is also suggested that these symbols were developed by telegraph operators who wanted to save bandwidth. This was more beneficial for the most active or traded stocks that were assigned one-letter symbols. For example, A for Agilent Technologies and C for Citigroup.
Ticker symbols are assigned for traded companies on a first-come, first-served basis. Exchanges like NYSE or AMEX take special consideration and do not allow duplication of symbols. A symbol once chosen for a company cannot be used by another company even in a different exchange. Since July 2007, SEC allowed companies with three-letter symbols, such as TXN for Texas Instruments, to retain the tickers when they migrated from NYSE to NASDAQ. However, today even companies with one- or two-letter symbols are allowed to retain them when they migrate.
The symbols are unique to companies. For one-letter symbols, it is the first letter of the company name. However, for others it may be the abbreviation of the special product of the company. For example the symbol DNA for Genentech that deals in biochemical research or BUD for Anheuser-Busch, the manufacturer of the brand Budweiser Beer.
In the United Kingdom, ticker symbols were known after London Stock Exchange's Exchange Price Information Computers (EPICs). Today, although the name has been modified to Tradable Instrument Display Mnemonics (TIDM), investors prefer the name EPIC. For Non-European countries, tickers are of utmost importance as the stocks can be identified by their unique symbols and this makes it easier for people around the world to trade them.
International Securities Identifying Numbers (ISINs) are tickers used for bonds, commercial paper, equities, and warrants as defined by ISO 6166. This 12-character alpha-numerical code again serves as a unique identifier for these securities in the exchanges.
Another important aspect is that different symbols or tickers used for preferred stocks in different exchanges. They are assigned different tickers in different stock exchanges giving rise to confusion for investors. For example, if xxPR denotes a preferred stock in NYSE (x can be any letter at all), it will not represent the same stock or even a preferred stock in NASDAQ. It takes some time and effort to identify the symbols that are used in different stock exchanges around the globe.
Moreover, the futures tickers are varied from stocks. For example, crude oil futures will have a ticker CLH8 for the futures of March 2008. Here, CL is crude oil, H denotes March, and 8 the year 2008.
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