Tick-Tick-Tick: How Ticker Symbols Shape the Financial System

Ticker symbols exist to uniquely identify companies. In rare instances, though, they can also cause confusion. One example of this is the company Zoom Technologies, whose stock price rocketed by 3,700% in early 2020. During the COVID-19 pandemic, video communication platforms like Zoom experienced a business upturn as many office employees shifted to working from home. Consequently, investors in droves mistakenly bought oodles of shares bearing the abbreviation ZOOM. They belonged, however, to a manufacturer of mobile phone parts. Once the misunderstanding came to light, the company’s stock price plummeted to an even lower level than before the accidental boom. In reaction to that and to prevent further mix-ups from happening, the US Securities and Exchange Commission assigned the cellphone parts maker a new shorthand symbol: ZTNO.

Disadvantageous abbreviations can occasion adjustments to ticker symbols, but so can mergers, as a recent example illustrates. Avolta changed its previous stock ticker symbol to better match the company’s new name. It had formerly been called Dufry and sported the symbol DUFN. After the merger with Autogrill and the renaming of the combined company to Avolta, it made sense to switch to the abbreviation AVOL in order to ensure a consistent corporate image.Alongside the alphabetic codes, there is also a three-digit numeric code for each currency, which proves to be very useful particularly when currency codes are employed in countries that do not use Latin scripts. Wherever possible, the numeric currency code is the same as the three-digit ISO numeric country code. The code 840, for example, stands for the USA and thus also for the US dollar.

Particularly in the early years after the introduction of ticker symbols, joint-stock companies were free to choose which abbreviation they wanted to use because only a few letter combinations were already taken. They thus could get really creative. US-based restaurant chain operator Brinker International, for example, chose EAT as its ticker symbol. It has a strong recognition value and is easy to remember even though it has no direct connection with the corporation’s name.

Ticker symbols come into being differently depending on the country, securities exchange, and asset class in question. European ticker symbols normally consist of four to five letters, whereas US securities exchanges frequently use just one to four letters. Asian countries often use just numbers in order to avoid transcription problems.

On SIX Swiss Exchange, ticker symbols are assigned fully automatically or with manual assistance depending on the asset class:

1.     Stocks

Before going public, an issuer has the possibility to request a specific ticker symbol, which is normally an abbreviation of the company’s name, such as GALD in the case of Galderma, for example. If the symbol desired is already taken, the issuer chooses a different available symbol instead. The ticker symbol is assigned with manual assistance.

2.     ETPs and ETFs

Issuing entities usually propose ticker symbols themselves when they create exchange-traded products and funds. The ticker symbols are then officially approved subject to certain guidelines, provided that they are still available. In accordance with requirements, they always consist of four to five characters, though it doesn’t really matter if they are digits or letters. The ticker symbols are assigned with manual assistance.

3.     Bonds

If a company, such as Mustermann Inc., floats a bond issue, the accompanying symbol is typically formed by combining the first three letters of the company’s stock ticker symbol (MUS in this case) with the last two digits of the issuance year. This means that the first bond issued this year would bear the symbol MUS24, followed by MUS241 for the second one, MUS242 for the third one, and so forth. The ticker symbols are assigned with manual assistance.

4.     Structured Products

Ticker symbols for structured products are five to six characters long. The last letter of the symbol designates the issuer; U, for example, stands for UBS. Sometimes special additional letters are tacked onto the end of the symbol, such as Q for products from companies in bankruptcy. The ticker symbols are assigned automatically in CONNEXOR.