A ticker symbol, or stock symbol, is an abbreviation of letters (and sometimes numbers) that is used to identify publicly listed companies. Each stock on an exchange, like the London Stock Exchange (LSE) or New York Stock Exchange (NYSE), has a different identifying ticker. And no two firms will have the same symbols on the same exchange.
Whenever looking at stock market news, the seemingly random letters scrolling across the screen are the tickers of different companies, giving investors and analysts quick access to share price information. But how do these work? And is there more than one identification system?
What is a stock ticker symbol?
As previously mentioned, a stock ticker symbol is a unique identification symbol for publicly traded companies. And they help investors and traders find and trade the company’s stocks easily.
Different stock markets have different rules for the length and format of the ticker symbols. For example, for businesses to be eligible for trade on the NYSE, the stock symbol should be three letters or fewer.
On the other hand, for NASDAQ stock exchanges, stock symbols should have four or more letters. However, there’s no classification difference between companies that have a different number of letters.
While stock tickers are more prevalent in the United States and the United Kingdom, investors typically use the International Securities Identification Number (ISIN) in Europe. What’s the difference?
- Stock Ticker – Identifies a stock at the exchange level containing between one and five letters or numbers.
- International Securities Identification Number – Identifies a stock on the international level. It’s a 12-digit alphanumeric code that provides specific details about the company, the exchange it’s listed on, and which country that exchange is based.
Two companies on different exchanges may have the same stock ticker. However, every listed business worldwide has its own unique ISIN. And since Europe contains 57 exchanges across 37 countries1, the risk of two firms sharing the same ticker is much higher. Hence why European investors prefer the ISIN method of identifying stocks.
What are the ticker symbol modifiers?
In some cases, stock symbols have optional modifiers or extensions. These modifiers are added to the end of a stock ticker with a (.) or (^) followed by one or two more letters. Each modifier gives a different piece of information to analysts and investors. This could be related to the type of security, characteristics of the stock, or the class of stock.
Here is a complete list of available letter modifiers and what they mean.
- A – Class A shares.
- B – Class B shares.
- C – The firm doesn’t meet all the prerequisites to be listed on the exchange. However, it’s been allowed to remain listed for a short period of time. The technical term for this scenario is called an Issuer Qualification Exception.
- D – New issue of shares from existing stock.
- E – The company is late in its regulatory filings. This is sometimes denoted as LF instead.
- F – Foreign stock issue.
- G – First convertible bond issued.
- H – Second convertible bond issued.
- I – Third convertible bond issued.
- J – Shares that have voting rights.
- K – Shares that don’t have any voting rights.
- L – This can refer to many different miscellaneous factors. Some common examples include preferred stocks and warrants. This is sometimes denoted as Z instead.
- M – Fourth-class preferred shares
- N – Third-class preferred shares
- O – Second-class preferred shares
- P – First-class preferred shares
- Q – The company is currently in the process of bankruptcy.
- R – Shares issued from a rights offering.
- S – Shares that grant the owner benefits from the assets held.
- T – A stock issue that has either rights or associated warrants.
- U – Units
- V – Shares that are about to undergo corporate action, such as a stock split or consolidation.
- W – Warrant issue.
- X – Shares belong to a mutual fund.
- Y – Represents an American depositary receipt (ADR).
- PK – Identifies Pink Sheet stocks. These are businesses too small to trade on the leading US stock exchanges and are instead traded over-the-counter (OTC).
- SC – Shares are listed on the Nasdaq Capital Market. This is the home of many early-stage companies.
How are ticker symbols used?
Identifying a particular security is one of the most common uses for a ticker symbol. But they can be used in various ways by investors and traders alike.
- Identify Securities – Find information about a specific security, such as a stock, bond, warrant, or option.
- Execute Trades – Send trade orders on the stock market using tickers instead of a company name for faster trade execution.
- Receive Stock Quotes – Receive stock price information using a stock ticker.
- Research Companies – Use the ticker to quickly find all regulatory filings on database websites such as EDGAR or InvestEgate.
Why are they called ticker symbols?
Edward Calahan invented the ticker symbol. He was a telegraph operator who worked for the New York Stock Exchange. And he created ticked symbols to transmit stock price information over telegraph lines quickly.
The incoming stock price information would be printed on top of a thin strip of paper tape, making a ticking sound in the process. Hence the name, ticker. This technology was first introduced on 15 November 18672 and continues to influence how stock quotes are delivered today.
The last telegraph ticker machine debuted in 1960 before being replaced by electronic and, eventually, digital systems.
The bottom line
A company’s ticker symbol is essential when buying or selling shares. It is also needed when investors need to research any company. Because every stock symbol is unique, it avoids confusion among investors, especially when discussing two separate businesses with similar names.
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Article Sources
- Council of International Chambers of Commerce. “List of European Stock Exchanges“
- History, “This Day in History“
This article contains general educational information only. It does not take into account the personal financial situation of the reader. Tax treatment is dependent on individual circumstances that may change in the future, and this article does not constitute any form of tax advice. Before committing to any investment decision, an investor must consider their individual financial circumstances and reach out to an independent financial advisor if necessary.