Value Investing / Main Index / previous / next

August, 2010


With appreciation to, this time we are engaging in a little stock exchange trivia. What are the New York Stock Exchange, the American Stock Exchange, and the Nasdaq?

These are often referred to on radio or television business reports, but unless one is actively involved in stocks investing, and sometimes even then, one may not really know what the terms actually mean. So, here are the answers to that query:

New York Stock Exchange - Also called the NYSE or the Big Board, as the names suggest this is a very big equities exchange in New York, specifically with its headquarters at 11 Wall Street in lower Manhattan, the largest exchange for trading stocks in the world, from the standpoint of market value of the total trades occurring on it. Often associated with floor trading, using the open outcry system, the NYSE today is more an electronically conducted trading institution. The NYSE trades buy and sell orders in over 2750 different stocks, the number varying a bit from time to time. It trades many more stocks now since its acquisition in 2005 of Archipelago and a merger in 2007 with Euronext, the European stock exchange. After that merger, the parent company of the NYSE is called, reasonably enough, NYSE Euronext.

American Stock Exchange - When I began buying and selling small groups of stock shares, this was the main alternative and competitor to the NYSE in this country, and its stock listings, plus their bid and asked prices, were published in the daily newspaper, usually on the page right after those listed for the larger NYSE. Now, however, things are a bit more confused. Historically also called the AMEX, the American Stock Exchange is these days the third largest exchange, after the NYSE and the Nasdaq, is also based in New York City, and does the trades for 10% of the equities or stocks, exchange traded funds, closed end funds, and derivatives traded in the U.S. However, effective in 2008, the AMEX was acquired by NYSE Euronext, which then in 2009 changed its official name to NYSE Amex Equities.

Traditional open outcry trading - NYSE - Wikipedia

Nasdaq Exchange - Previously called the NASDAQ, which stood for the National Association of Securities Dealers Automated Quotation, but now properly just designated by Nasdaq, this is a computerized system, the world's first, started in 1971, for exchanging (or buying and selling) relatively actively traded over-the-counter securities. Over 5000 stocks are traded via the Nasdaq.

Over-the-Counter - "Over-the-counter" or OTC refers to "unlisted" securities, not on the historically traditional or formal exchanges such as the NYSE, NYSE Amex Equities, or Toronto Stock Exchange (TSE). The purchases and sales that occur over-the-counter, both of stocks and derivatives, may be bought and sold via a dealer network, whereby dealers negotiate and agree directly by phone or computer for the trades which are taking place. Usually stocks traded over-the-counter are too small to be listed on the regular exchanges, which have requirements that small stocks often cannot meet. Since the Nasdaq, though a dealer network, is now considered a regular stock exchange by virtue of its large volume, now second after the NYSE, Nasdaq stocks are not any longer considered OTC securities. Instead, OTC assets are more often referred to as unlisted stocks that trade via the Over the Counter Bulletin Board (OTCBB) or on the pink sheets. Bonds are not traded on the formal exchanges and so are also considered OTC assets.

Pink Sheets - During the Great Depression, savvy investors such as Benjamin Graham could make a lot of money via investing in "pink sheets" or OTC stocks, which then referred to beaten down securities that were not listed and yet often had more value than their bid and asked prices indicated. These days, however, investors need to be leery of OTC or pink sheets stocks since they are usually penny stocks, easily manipulated, and/or offered by companies with quite bad credit. Though exceptions may be found, in general these are considered highly speculative and risky today. Per "Pink sheets" refer to: "A daily publication compiled by the National Quotation Bureau with bid and ask prices of over-the-counter (OTC) stocks, including the market makers who trade them. Unlike companies on a stock exchange, companies quoted on the pink sheets system do not need to meet minimum requirements or file with the SEC. Pink sheets also refers to OTC trading." They add that: "The pink sheets got their name because they were actually printed on pink paper. You can tell whether a company trades on the pink sheets because the stock symbol will end in '.PK.' "

Primary source: Financial Dictionary in


Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)

Value Investing / Main Index / previous / next