The Three Main Stock Exchanges

The three main stock exchanges in the United States are the American Exchange (AMEX), the National Association of Securities Dealers Automated Quotations (NASDAQ), and the New York Stock Exchange (NYSE). Every day, billions of dollars worth of stock are traded at these exchanges. In this paper, we will discuss the NYSE and the NASDAQ and their similarities and differences (Administrator, 2009).

The NYSE is an actual physical location with trading floors. A dealer is used to sell or buy shares. The dealer processes an order at a trading post on the trading floor and each stock is listed at only one post. The stock is only assigned to one specialist who maintains the market for that stock. The specialist is responsible for keeping records for that stock and is always ready to sell or buy shares at the stated prices. The specialist also auctions orders on the physical training floor (Brooks, 2013).

NYSE Euronext (NYX) started in 2007. It was created by the merger of Euronext N.V. and NYSE Group, Inc. This exchange is the first one that jumped borders and has exchanges in Europe and the United States. The NYX has over 8,000 listed issues from over fifty five countries and represent 1/3 of the world's equities trading (NYSE Euronext, 2013). If you want to buy or sell, you cannot just call the NYX. You must contact a broker who can place an order through a fully electronic NYX market. Everything is electronic from bid and ask matching to settlement delivery operations. Market specialists working for the NYX no longer meet on a floor and cry out orders but instead work orders on a computer (NYSE Euronext, 2013).

The NYX works on four systems. It starts with the automatic order routing system. This system takes the investors orders and puts them in the listing central system. The listing central system then operates the orders automaticly. The information dissemination system, which is fed by the listing system, is the single clearinghouse that provides sellers and buyers a successful conclusion to their operations (NYSE Euronext, 2013).

The NASDAQ is solely a United States exchange. It is the second largest exchange in the world, beat out only by NYSE. The NASDAQ is owned by NASDAQ OMX Group. The NASDAQ started in 1971 and was the very first stock market in the world to go electronic. The NASDAQ helped lower the difference between the bid price and the ask price (the spread). It was not welcomed by dealers because they made their money on the spread (NYSE Euronext, 2013).

NASDAQ traders now accomplish everything virtually. An authorized dealer posts the ask price and a bid price with the number of shares that they will buy or sell at the respective price. People who wish to buy or sell shares must submit orders to the dealer at the lowest ask (if they are buying) or the highest bid (if they are selling). The dealers make money on the difference between the stock purchase and sale prices (the spread). The NYSE also uses the bid and ask prices for buying and selling stock (Brooks, 2013).

NASDAQ was started to up the number of over the counter stocks traded. Since these stocks could not meet the requirements of the larger exchanges like the NYSE, they were previously traded over the phone and made it very difficult for the public to trade. In 1975, NASDAQ created its own listing requirements which helped separate smaller and larger companies. This helped the smaller companies to compete with the larger ones that