All stocks traded on world stock exchanges have a lot of parameters. Some change every second or with a certain frequency (the value of the paper, the dividend yield, the number of shares in circulation, the number of securities in the lot, the level of listing, etc.), but there is also a constant parameter that operates throughout the "whole life" of the security. This is her ticker. A ticker is a short name of a financial instrument. A fairly clear parameter. It can be said that one of the basic parameters of practical investment. But there are points that will be interesting for both beginners and practicing investors to learn about.
Ticker: its meaning and functions, tickers on different exchanges, mistakes of investors "with the participation" of tickers – we will tell about this in our article.
What is a ticker
Ticker comes from the English word ticker, which means a symbol. A ticker is a symbol or a short name that is assigned to a security at the time of its registration on the exchange platform. The ticker is its unique identifier within this exchange platform.
Ticker is a combination of letters of the Latin alphabet. Sometimes a ticker is an abbreviation of the name of the issuing company:
- Apple's AAPL ticker
- AMZN - Amazon's ticker
- IBM – ticker of International Business Machines
For the most part, tickers are created as similar as possible to the company name in order to minimize the time of paper recognition in the windows of terminals and brokerage applications.
But still there are tickers of some stocks that are completely out of tune with the name of its bearer (the issuing company). This may be due to the rebranding of the company when it changed its name. A ticker is a parameter that is given at the issuer's IPO (initial public offering on the stock market), it is stable throughout the "life" of the stock. Exceptions are reorganization processes, as a result of which a new business is formed – mergers and acquisitions (the issuer is part of another public company), the separation of individual companies from their holding. This is one of the reasons for the discrepancy. But there may be others. Each case is different.
The stock ticker, trading code, Ticker symbol, Stock symbol are all one parameter that allows the investor to find the necessary trading instrument in a quick way. Also, it is the ticker, and not the full name of the financial instrument, that is more convenient to use in various infographics. For example, news resources, running information lines with trading results contain a ticker.
On the websites of stock market players and news agencies, you can find a similar scheme - a market map on which companies are represented by their tickers and the block size corresponds to the market share of the security. The color shows the change in the value of asset quotations for the reporting period: growth - green, red - fall.
Tickers on different exchanges
A ticker is a conditional short designation of a company's stock within the framework of one trading platform.
If the shares or depositary receipts of one company are traded on several trading platforms, then the tickers may be both identical and may also have cardinal differences.
Usually a ticker is a set of 4-6 Latin letters. But there are many examples when the ticker consists of only one letter. Such examples are not found on the stock market, but there are enough of them on American stock exchanges. Usually, large well-known companies with an impressive history have a short one-letter ticker:
- F - Ford Motor Company, a well-known global automaker.
- T - AT&T INC., an American telecommunications conglomerate.
- C - Citigroup Inc., one of the largest financial holdings in the United States.
- V – Visa Inc is one of the world's leading companies in the field of payment technologies.
- M - Macy's, Inc. is a company that operates a large retail chain throughout the States with the same name.
A ticker consisting of a set of Latin letters is the most common practice. But there are a lot of differences in the world. So in Japan and China, tickers are written in hieroglyphs. Since Asian markets are international – both local and foreign investors, including large institutions, are present in them, such a designation could have an extremely negative impact on the definition of securities. Therefore, in addition to the hieroglyphic ticker, Asian colleagues have additionally provided an alternative system of digital codes for foreign investors.
So, for example, the shares of Asian companies would look like on the stock exchange of Taiwan or Japan:
Ticker and ISIN
A ticker is a conditional short designation of a company's shares within a specific trading platform. An attentive investor may wonder: "Can two completely different companies, but with the same or similar names, get the same ticker, for example, in Europe and the USA? After all, no one and nothing can prevent two exchanges from assigning the same ticker even on the same day?". The answer is that there is no centralized control over all world exchanges in this matter. Therefore, there are real examples of public companies from geographically different trading platforms that have the same or similar short trading parameter:
In order to avoid confusion, securities are additionally assigned a unique code within the overall global financial system. It is called the International Identification Code of the security ISIN (International Securities Identification Number). It consists of 12 characters:
- The first 2 digits are the country code. For USA – US, Jersey – JE, UK – GB, Germany – DE, etc.
- The next 9 digits are NSIN or the national identification code of the security.
- The last 1 digit is a check digit.
The ISIN code is also used to identify bonds, futures and options. The tickers of securities on each exchange may be similar, but the ISIN of each paper is unique.
All broker applications for mobile devices, exchange terminals and websites of stock and currency market participants support the general rules for identifying securities and using their attributes.
Investor mistakes involving tickers
The trend of increasing the number of investment securities on the stock markets, on the one hand, provides more opportunities for choice, on the other hand, the complexity of choosing the best instruments in all this diversity increases, as well as the risks of making technical errors when submitting applications. Choosing the best assets is the topic of a separate and far from one article. But the problem of investors' mistakes (incorrectly put up an application, made a mistake with the number / did not take into account the multiplicity of lots, instead of a purchase application, put up a sale application and "got to the margin") is a consequence of inattention. Statistics on erroneous actions on the stock market have been accumulated: about 5% of all actions on the market are erroneous, which probably indicates that not only beginners are mistaken. And in this error statistics there are real examples of errors due to the similarity of tickers or company names
The following case is known. Ford, whose securities are traded under the ticker F, is often confused with another less powerful company, Forward Industries, Inc. (manufacturer of protective solutions for hand-held electronic devices). Her ticker is FORD. And therefore, when a car manufacturer comes out with good news, the stock price, the latter gets an impulse to grow.
But the most striking example of ticker errors is the case that occurred on October 4, 2013, when the shares of Tweeter Home Entertainment Group (a chain of stores selling televisions) rose by more than 1,000% during the day. The thing is that at that time the IPO of Twitter was planned. The reason for this incident was the consonance of the TV seller's ticker (TWTRQ) with the name Twitter.
There is also a known case when during the day of February 6, 2017, the capitalization of the little-known American IT company SNAP Interactive (now Paltalk, Inc) tripled due to the fact that investors mistook the securities of this company for the papers of the owner of the famous Snapchat messenger, (Snap Inc), whose IPO was just expected.
How not to make a mistake with the ticker
Errors may be related to the consonance of company names and tickers. Because of such confusion, the investor may not buy exactly what he wanted. From the outside, such mistakes seem absurd, but as they say, "you can't go against statistics." Here are examples of where else an investor can "stumble":
Apple Hospitality REIT, Inc is a real estate fund (REIT) specializing in investments in hotel real estate (ticker APLE). Apple Inc is a world–famous technology company, the creator of gadgets with the Apple logo (ticker AAPL).
Zoom Video Communications, Inc. is an IT company that creates solutions for online video conferencing (ticker ZM). ZoomInfo Technologies Inc. is a software developer for optimizing and improving the efficiency of marketing departments (ticker ZI).
Globaltrans is a company operating in the freight rail transportation industry (ticker GLTR).
The list can be continued further. If you have something to share, perhaps even your experience, tell us about it in the comments under this article.
Securities have a lot of parameters. Ticker, ISIN, lot content, listing level are parameters that do not characterize the paper quality in any way. We have considered such a parameter as ticker and ISIN. These metrics are used to identify a security in a wide variety of financial instruments. For an investor, a ticker is important for quickly searching for a paper, searching for information on it in various sources (usually the ticker acts as a hashtag for searching). When working with this parameter, the main task is not to confuse and replenish that 5% statistics with errors related to the similarity of tickers and the names of several public companies.
For the investor, the quality parameters of the stock are of primary importance. How reliable it is and how promising it is, what are the sources of growth. And these parameters are not public data that is available to all investors. This data is the result of deep analytics of the company's business. Such an analysis includes both an analysis of the external, internal environment, and an analysis of the financial results of the company's activities. This work may seem extremely difficult, but its result is worth it. In addition, investors currently have a lot of tools at their disposal that facilitate the task of conducting a comprehensive analysis.