What is a Ticker Symbol?

The United States uses a ticker symbol as an identification code for a particular stock or mutual fund. It would be comparable to a person’s social security number. The ticker symbol is primarily used for placing orders with brokers or investigating a particular stock and can be located running across the bottom of any financial television or internet screen.

This ticker symbol system is for stocks and mutual funds of publicly traded companies and corporations. The term ticker originated from the sound the ticker tape machines used to make. The modernized system now displays letters or numbers to uniquely identify a specific stock or mutual fund.

The system easily shows whether a stock or mutual fund is trading higher or lower for the moment, and by how much. Investors use these ticker systems to follow their investments and help make timely decisions as to when to buy or sell a security.

Letters are used to identify each unique stock or mutual fund. These letters can be either an abbreviation of the name of the issue or a mnemonic to trigger the corporation or its product. For example, “T” is the ticker symbol of AT&T (American Telephone and Telegraph), representing “telephone.” Anheuser Bush uses the mnemonic “BUD” for its trademark beer and Amazon.Com uses “AMZN.”

Standard and Poor’s (S&P) developed the ticker symbol to standardize the system. Three letters associated a stock with the NYSE (New York Stock Exchange); four letters indicated the stock traded on the NASDAQ (National Association of Securities Dealers Automated Quotation system), or the AMEX (American Stock Exchange). Ticker symbols using five letters referred to NASDAQ or AMEX stocks with more than one issue. Symbols with five letters ending in X were recognized as Mutual Funds. OTC (Over the Counter stocks) and Pink Sheets are not actual exchanges, yet they follow the ticker symbol tradition.

In July 2007, the Security and Exchange Committee (SEC) began permitting companies to keep their original symbols when changing exchanges. Previously, they had to adopt a new ticker symbol to stay in coordination with the appropriate stock exchange. This change has been effective in keeping the continuity of a stock with its history but it is no longer possible to tell at a glance which exchange a stock trades on.