Monday, December 10, 2007

Several exchanges




While several stock exchanges now exist in the US, a consolidated tape instantly provides information on every stock traded on the New York Stock Exchange (NYSE) and regional exchanges.




Most stock transactions, in dollar value terms, occur on the New York Stock Exchange, also known as the Big Board. Here, the standards for listing have always been the highest.




There is also the American Stock Exchange, known as the Amex, as well as several regional exchanges for listed stocks.So-called "unlisted stocks" are traded in the over-the-counter (OTC) market, which is a market linked together by a communications network available to all stockbrokers.




Unlisted stocks are sold primarily on the basis of the spread, or difference, between the bid and asked prices of dealers making markets in particular stocks. Listed stocks are sold primarily on a commission basis, with small bid-ask spreads.




The commission varies depending on the price and size of the order. Note, however, that commissions are also charged on OTC stocks.The National Association of Securities Dealers maintains an automated quotation system (NASDAQ) that enables its members to trade OTC stocks directly among one another.




Thanks to this system and its computers, reliable price and volume-of-trading information on OTC stocks is now available, making most OTC stocks as easy to trade as listed stocks. Not all OTC stocks are on the NASDAQ system, however.