Every stock traded on the world’s stock exchanges is identified by a short symbol. For example, the symbol for AT&T is just T. These symbols date from the days when stock trades were reported on a ticker tape. Ticker symbols are still used today as brief, unambiguous identifiers for stocks. Similar abbreviations are used for
The New York Stock Exchange (NYSE) is the largest agency auction market in the United States. The NYSE uses an agency auction market system which is designed to allow the public to meet the public as much as possible. The majority of volume (approx 88%) occurs with no intervention from the dealer. Specialists (specs) make
NASDAQ is an abbreviation for the National Association of Securities Dealers Automated Quotation system. It is also commonly, and confusingly, called the OTC market. The NASDAQ market is an interdealer market represented by over 600 securities dealers trading more than 15,000 different issues. These dealers are called market makers (MMs). Unlike the New York Stock
Both Market Makers (MMs) and Specialists (specs) make markets in stocks, meaning they buy and sell from their own accounts. MMs are part of the National Association of Securities Dealers market (NASD), sometimes called Over The Counter (OTC), and specs work on the New York Stock Exchange (NYSE). These people serve a similar function but
Instinet is a professional stock trading system, founded by Reuters and now owned by Nomura. Institutions use the system to trade large blocks of shares with each other without using the public stock exchanges. Commissions are slightly negotiable but generally low. Instinet also runs a crossing network of the NYSE last sale at 6pm. A
Circuit Breakers, Curbs, and Other Trading Restrictions A variety of mechanisms are in place on the U.S. exchanges to restrict program trading (i.e., to cut off the computer connections) whenever the market moves up or down by more than a large number of points in a trading day. Most are triggered by moves down, although
The Chicago Board Options Exchange (CBOE) was created by the Chicago Board of Trade in 1973. The CBOE essentially defined for the first time standard, listed stock options and established fair and orderly markets in stock option trading. As of this writing, the CBOE lists options on over 1,200 widely held stocks. In addition to
The American Stock Exchange (AMEX) once listed over 700 companies and was the world’s second largest auction-marketplace. Like the NYSE (the largest auction marketplace), the AMEX used an agency auction market system which is designed to allow the public to meet the public as much as possible. In other words, a specialist helps maintain liquidity.