The exchange on which a security is traded. Generally, the exchange a stock trades on does not matter, with one exception: stocks that do not meet the listing criteria of the major exchanges (the AMEX, NASDAQ, or the NYSE) are listed on the non-NASDAQ or bulletin board. Stocks fail to meet the listing criteria due to lack of financial strength, lack of liquidity, or failure to file reports of their quarterly results properly. To eliminate these companies from your search, select All Except Bulletin Board.
The American Stock Exchange. The AMEX is the second-largest stock exchange in the U.S., after the New York Stock Exchange (NYSE). Since its listing rules are a little more lenient than the NYSE’s, the AMEX has a larger representation of stocks and bonds issued by smaller companies. Some index options and interest rate options are traded on the AMEX. The AMEX started as an alternative to the NYSE. It originated when brokers began meeting on the curb outside the NYSE in order to trade stocks that failed to meet the Big Board’s stringent listing requirements. The AMEX now has its own trading floor. In 1998 the parent company of the NASDAQ purchased the AMEX and combined their markets, although the two continue to operate separately. AMEX is also called The Curb.
NASDAQ is a computerized system established by the NASD to facilitate trading by providing broker/dealers with current bid and ask price quotes on over-the-counter stocks and some listed stocks. Unlike the AMEX and the NYSE, the NASDAQ (once an acronym for the National Association of Securities Dealers Automated Quotation system) does not have a physical trading floor that brings together buyers and sellers. Instead, all trading on the NASDAQ exchange is done over a network of computers and telephones. Also, the NASDAQ does not employ market specialists to buy unfilled orders like the NYSE does. The NASDAQ began when brokers started informally trading via telephone. The network was later formalized and linked by computer in the early 1970s. In 1998 the parent company of the NASDAQ purchased the AMEX, although the two continue to operate separately. Orders for stock are sent out electronically on the NASDAQ, where market makers list their buy and sell prices. Once a price is agreed upon, the transaction is executed electronically.
The New York Stock Exchange. The NYSE is the oldest and largest stock exchange in the U.S., located on Wall Street in New York City. The NYSE is responsible for setting policy, supervising member activities, listing securities, overseeing the transfer of member seats, and evaluating applicants. It traces its origins back to 1792, when a group of brokers met under a tree at the tip of Manhattan and signed an agreement to trade securities. Unlike some of the newer exchanges, the NYSE still uses a large trading floor in order to conduct its transactions. It is here that the representatives of buyers and sellers shout out prices at one another in order to strike a deal. This is called the “open outcry” system, and it usually produces fair market pricing. In order to facilitate the exchange of stocks, the NYSE employs individuals called specialists who are assigned to manage the buying and selling of specific stocks and to buy those stocks when no one else will. Of the exchanges, the NYSE has the most stringent set of requirements in place for the companies whose stocks it lists, and even meeting these requirements is not a guarantee that the NYSE will list the company. The NYSE is also called the Big Board.