- Decoding Ticker Symbols is the alphabetic code of the company in the stock exchange
- The ticker symbol consists of one letter to five letters depending on the original name of the company
Decoding Ticker Symbols is an alphabetical code given to the companies which are listed on the stock exchange to ease the trading process in the ring and also to give companies a unique identity through which traders can search them on the stock exchange platform.
In the majority of cases, the ticker symbol is the initial letter of the company’s original name but vice versa is also possible where the ticker symbol may not be the initial letter of the company’s original name. Ticker symbols generally happen to be between 1 letter to 5 letters. In the five-letter ticker symbol, the fifth letter indicates something such as Acer Therapeutics Inc. having (an ACERW) ticker symbol where ACER represents the name of the company and W represents that the warrants are attached to the company’s share. Similarly, different letters indicate different information about the company.
History of Decoding Ticker Symbols
In 1800 when there were only a dozen companies in the market, traders easily did their trade but as more and more got registered and the count went up, it became difficult for traders to trade with frequent price changes of the market and it was a time-consuming process too. So they shortened the name of the company to one to five alphabet.
The Decoding Ticker Symbol was invented by Calahan in the year 1867, earlier Decoding Ticker Symbols were two alphabets, which were used to denote the name of the company and were followed by the numeric digit used to denote the number of shares to be traded. The first ticker symbol was used on the new york stock exchange where the shares of union pacific railroad company were given (UP) ticker symbol and was followed by the number of shares.
As more stock exchanges started to adopt this method and rise in the number of registered companies, the size of the encoding Ticker Symbols also increased, in 1920, it was increased to three alphabets then in 1950, it increased to four alphabets and so currently it is at four. Today major stock exchanges use these ticker symbols and it has become an important part of financial branding and marketing. Many companies choose their ticker symbol which can be easily recognized or which has some connection with the company.
Types of Decoding Ticker Symbols
If a company has more than one class of shares in the market, then a class is added to a suffix to the name of the company for example ABC Ltd has issued a preferred share in the market, then the ticker symbol of the company in the stock exchange would be ABC.PR.
Share Voting Class
Companies having multiple shares listed on the stock exchange use this method to differentiate between the shareholders who have voting rights and those who don’t. For example, ABC Ltd issued two classes of shares – class A and class B, and at the time of issue, a company mentioned that class A has the voting right and Class B don’t have the voting rights, in this case, the ticker symbol of both the class of share will be different such as ABC. A and ABC.B.
The stock ticker modifier
The ticker symbol is also used to give the trading status of the company to the trader. The information is usually represented by an alphabet after the ticker symbol of the company preceding the dot in the ticker symbol.