What is a Ticker Symbol?

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Definition:

A ticker symbol is a shorthand code that traders use to reference a company, rather than spelling out the full name.

🤔 Understanding ticker symbols

Ticker symbols are a short series of letters and numbers that act in place of a company’s name when trading stocks. In the past, using stock ticker symbols allowed information to flow more quickly on the trading room floor and required less space on the ticker tape (an old way of communicating current stock prices to investors). In the modern age of digital exchanges, the use of ticker symbols is more of a relic than a necessity. However, they are still widely used and are regulated by the Securities and Exchange Commission (SEC) in the United States. Sometimes the exchange adds characters to a ticker symbol to convey additional information — like the class of stock or the fact that the company is in bankruptcy proceedings.

Example

Most companies in the stock market have a ticker symbol that makes it easy to know which company the symbol represents. For example, Key Bank uses the ticker symbol KEY, Apple uses APPL, and General Electric uses GE. But sometimes the ticker symbol doesn’t belong to the company that you might think it does. For instance, the ticker symbol HP doesn’t belong to the computer company Hewlett-Packard (which goes by the brand name HP). Instead, it belongs to an oil field drilling company named Helmerich & Payne, Inc.

Takeaway

A ticker symbol is kind of like a website domain name…

A company that registers a domain name gets to use it. Even if the name fits a larger company better, it doesn’t matter (unless you’re sued for “cybersquatting”). Usually, you want a website address (and a ticker symbol) that people associate with your company. But, it doesn’t have to be www.yourcompanyname.com. It can be an abbreviation, or some reference to your business, or something else entirely.

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What is a ticker symbol?

A ticker symbol, also called a stock symbol, is a unique code that represents a company listed on a stock exchange. It’s typically an abbreviation of the company’s name or may have some other reference to the company. Ticker symbols once provided more speed and accuracy during hectic days on the trading room floor. They are still widely used today. Historically, the New York Stock Exchange required listed companies to use between one and three characters, while the NASDAQ required four character symbols. That distinction doesn’t hold anymore, and all companies can use between one and four characters in either exchange. In some countries, like the Hong Kong Stock Exchange, companies use only numbers as ticker symbols.

How are ticker symbols used to identify stocks?

Ticker symbols identify stocks in a few ways, which vary by the exchange rules. Each stock exchange may have unique guidelines for reserving ticker symbols. In the United States, the various stock exchanges now follow the Intermarket Symbols Reservation Authority’s (ISRA) National Market System Plan (NMS Plan), which is a uniform system for symbol registration. Securities traded over-the-counter (outside of an exchange) also use letter codes to identify products. However, those products don't follow the same guidelines. Under the NMS plan, listed companies select a root symbol that is between one and four letters or numbers, which identifies the company. In most cases, companies listed on the New York Stock Exchange have three or fewer characters, while the NASDAQ typically has four. An additional letter is called an extension, which sometimes communicates other useful information to traders.

Extensions

A fifth character on NASDAQ listed companies, or a character after a dot on the NYSE, provides additional details about a stock. However, an extension is not always required. In most cases, a company that has issued only class A stock won’t have an extension at all.

Some commonly used extensions for common stocks are:

A: Class A shares, which are common stock with preferential voting rights B: Class B shares, which are a lower class of common stock with fewer voting rights K: Non-voting shares

Preferred stocks use an extension to identify the preferential status of the stock:

P: first preferred O: second preferred N: third preferred M: fourth preferred

Some extensions signify that the owner holds added rights:

R: Is a blanket extension for added rights. See the company’s SEC filings for information about what those rights are. V: Means “when issued,” which indicates that the company is planning a stock split. W: Designates the shares are warrants, which are a special type of issuance by a company that gives the owner the right, but not the obligation to purchase shares of common stock at a predetermined price.

Financial Services Indicator

Since February 1, 2006, the NASDAQ has required data distributors to provide a Financial Services Indicator (FSI) on customer displays. The FSI codes replace some of the fifth letter characters, and are:

D: Deficient in meeting continued listing requirements E: Delinquent in regulatory reporting requirements Q: Bankruptcy proceedings are underway G: Deficiency and Bankruptcy H: Deficiency and Delinquency J: Delinquency and Bankruptcy K: Deficiency, Delinquency, and Bankruptcy

Market and Country Designations

Some reporting platforms list companies by their ticker symbol, plus a designator for the exchange upon which they trade. In some cases, this practice can confuse investors. For example, the Reuters platform uses the designator .N to indicate the stock trades on the NYSE. An investor might incorrectly think that security is a third preferred stock.

What is the history of ticker symbols in the US?

U.S. investors have been buying and selling company stocks on Wall Street for a long time. Trading on the New York Stock Exchange goes all the way back to 1792. Just imagine how information flowed in the late 18th-century. No text alerts or trading apps provided real-time information to investors, traders, and brokers. There wasn’t a rolling banner across the bottom of the TV telling you where things stood. This period was 135 years before the first dollar sign was transmitted via television. It was a century before you could pick up a phone and call your broker.

Back then, in 1792, the fastest form of communication was handing a handwritten letter to someone riding a horse. And that communication didn’t improve much for a generation or two of traders. It was over 50 years later, in 1844, when Samuel Morse sent the first long-distance message via the telegraph. His invention significantly improved the speed at which information flowed between people with money and those people making the trades on their behalf.

But,sending telegrams was still a time consuming and cumbersome process. Anything that could reduce the number of characters, while still communicating the same information, would be an improvement. Naturally, people used shorthand, abbreviations, and codes to relay information about companies to each other.

In 1867, just a couple of years after the Civil War ended, Edward Callahan revolutionized the information flow into a stream of financial data. He rigged a telegraph machine so that it would provide continuously updated information about trades happening in New York. The device would print a short code for a company and the current trade price on a long spool of paper.

As the gadget translated the telegraph of each new trade, it stamped each character onto the paper ribbon. You can imagine the machine making a constant tick-tick-tick throughout the trading day. Eventually, that paper ribbon with all of those tick marks became known as ticker tape. And the shorthand codes that people used in place of company names would become known as ticker symbols.

What are the basics of ticker symbols?

Ticker symbols are just a few letters that act as unique identifiers for companies listed on a stock exchange. Each company gets to reserve the symbol they want to use. But each combination of letters is restricted to one company.

Most companies want a symbol that is easy to associate with the company name. For example, Microsoft uses MSFT as an abbreviation for its name. Likewise, Apple, Inc. uses APPL, Facebook uses FB, 3M uses MMM, and Allstate uses ALL. Sometimes, the symbol is phonetic, like how XON sounds like Exxon (although the symbol changed to XOM after a merger with Mobile).

At one point in time, people valued single-character ticker symbols. A few of those long-lived, large corporations still use those one-letter symbols today. For example, F is Ford Motor Company, K is Kellogg, and G is Gillette. AT&T uses a single letter T as its symbol. Some corporations still seek out these unique stock symbols. For instance, Zillow picked up the Z symbol, and Wayfair now uses the W.

Other companies have opted to use their ticker symbols more creatively, as an extension of their marketing. For instance, Anheuser-Busch reserved the ticker symbol BUD, which is a reference to its most popular product — Budweiser. Another example is Harley-Davidson, a motorcycle company, which uses the symbol HOG (a slang term for a large motorcycle).

Tricon Global Restaurants, which was the parent company to KFC, Pizza Hut, and Taco Bell, traded under the ticker symbol YUM — a nod to its product line. In 2002, following a merger, the corporation changed its name to match its ticker symbol. It’s now known as YUM! Brands, Inc.

Where can you find the full list of ticker symbols?

Each stock exchange keeps a directory of companies and their registered symbols.

The New York Stock Exchange directory is available at:

https://www.nyse.com/listings_directory/stock.

For the NASDAQ, the stock screener has all of the listed companies and their ticker symbols:

https://www.nasdaq.com/market-activity/stocks/screener.

Other exchanges around the world offer similar lists for interested investors.

Ready to start investing?
Sign up for Robinhood and get your first stock on us.Certain limitations apply

The free stock offer is available to new users only, subject to the terms and conditions at rbnhd.co/freestock. Free stock chosen randomly from the program’s inventory. Securities trading is offered through Robinhood Financial LLC.

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