Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

LinkedIn: A Four-Letter Word on the NYSE

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It's a dot-com company with a four-letter symbol for its shares.

So that means it's listed on the Nasdaq, right?

In years past, this would have been a safe assumption. Three-letter ticker symbols were New York Stock Exchange stocks and four were Nasdaq.

But yesterday's IPO listed LinkedIn on the NYSE with the four-letter symbol LNKD.

The existence of four-letter symbols on the NYSE—and three-letter symbols on Nasdaq—stems from a regulatory fight several years ago.

The Nasdaq wanted to make it easier for companies to switch from the NYSE to its own exchange. Under rules that had existed for decades, companies had to add letters when they moved. So when Charles Schwab migrated, it changed its ticker symbol from SCH to SCHW

Initially, the NYSE resisted the notion of shorter symbols on Nasdaq.

It said this would confuse investors and actually argued it had intellectual property rights in the idea of shorter symbols.

But the Securities and Exchange Commission was won over by the idea that allowing companies to switch exchanges without giving up their symbols fosters competition between the exchanges. In February 2007, Nasdaq got approval to list stock symbols with three letters. Just a few months later, the SEC ruled NYSE-listed companies can keep their ticker symbols if they moved to the Nasdaq.

At first, the NYSE insisted that it wouldn't budge. It couldn't keep three- or fewer letter ticker symbols off Nasdaq but it could keep four-letter symbols off its own boards. It insisted this was a matter of brand integrity—at least for a little while.

In 2009, the SEC turned over approval of ticker symbols to the Options Clearing Corp. With this procedural change, came new rules that allow for four-letter symbols on the NYSE.

Incidentally, LNKD probably wasn't the first choice for LinkedIn. It would likely have preferred LINK. But that symbol was already taken by Interlink Electronics, a thinly-traded penny stock.


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