Why Companies Are Changing Stock Symbols

Ticker symbols were developed to help telegraph operators conserve bandwidth. The rules of listing have changed over the past couple of years and now some tickers are changing, too.

For years, the number of letters in a ticker indicated which exchange a stock was listed on. Tickers with three letters or less were used for NYSE stocks and tickers with four or more letters were assigned to NASDAQ stocks.

Photo by bobster1985, courtesy of flickr

In February 2007, the SEC granted NASDAQ the right to handle stocks with three letter tickers.

A few months later, the SEC approved a NASDAQ filing to allow NYSE stocks to keep their three letter tickers if they wanted to move to The NASDAQ Stock Market.

The most recent ruling allows the NYSE to list stocks with four letter tickers.

What difference does it make? Changing a ticker may not mean much, but changing the rules regarding tickers can be helpful to companies.

For some companies, the new ruling makes it easier for them to more closely match their names with their stock tickers.

For example, CACI International has been trading with the ticker ”CAI” for many years. As a result of the new ruling, the company will begin trading as “CACI” on Monday.

Companhia Vale do Rio Doce, the Brazilian mining company referred to as Vale, is also taking advantage of the rule and will change its ticker from “RIO” to “VALE” on Monday.

In addition to giving companies more choices for tickers, the rule change will also allow companies to keep their existing tickers if they decide to switch exchanges. This is the real difference a ticker makes.