Differences Between NASDAQ & Other Stock Exchanges

Historical Evolution of the Major Stock Markets

Stock markets or stock exchanges are self-inclusive. They cater to those individuals most interested and most able to buy and sell stocks. Like many institutions in America, stock markets were born out of a need to compete more effectively and concentrate wealth more easily. In 1792 twenty four New York stockbrokers and businessmen formed the beginnings of the New York Stock Exchange with the Buttonwood Agreement. In this, these individuals agreed to "give preference to each other" in order to avoid a monopoly on sales by securities auctioneers and thus prevent paying a commission on sales of stocks. This also allowed these individuals to avoid new players buying into their private stock domain through the advent of public auctions. In essence, the NYSE started out as a stock trading monopoly (Hoover's, 1995, 806). Traders who were left out of the Buttonwood Agreement formed the American Stock Exchange (AMEX) in 1921 (Hoover's, 1995, 806). In 1939, the National Association of Securities Dealers (NASD) formed the beginnings of NASD Automated Quotations (NASDAQ) market (Hoover's, 1995, 792).

Essentially, trading at the NYSE or AMEX is done within the context of an auction market that allows investors to trade directly with each other, without intermediation by dealers. Dealers and specialists are relegated to a secondary role (NYSE, Rule 92). Those that list on th

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oor, but buy and sell in an investor to investor mode, relegating the public's access to listed stocks through second and third parties. But NYSE and AMEX are not consistent. Apparently, in an effort to limit access of buying and selling NYSE stocks, the structure and regulation of who can do what on the floor of the NYSE is rigged in favor of profit. Specialists and traders are allowed to act on their own behalf under dozens and dozens of special rules and circumstances (Cochrane, et al, 1992, 60-61). What must be remembered is that the NYSE started as a monopolistic concern in a time when regulation of such markets were virtually unknown. AMEX was simply a continuation of the same ideas and needs. In essence, the NYSE and AMEX consist of collaborations of stock holders who have set the rules under which their own stocks may be bought And sold. NASDAQ was founded in 1939 as a voluntary regulatory body for OTC securities traders, who traded directly with a company or with market makers authorized to trade the stock. Specialists or traders shopped by phone, often gaining the advantage in price and spread, because they had a time advantage using electronic methods to research prices and sell (Hoover's 1995. 792). Although t
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Some common words found in the essay are:
NYSE AMEX, Post-Dual Listing, AMEX NASDAQ, Liquidity CARs, Suggestions Change, AMEX NYSE, NYSE Rule, Buttonwood Agreement, Markets Stock,  , AMEX Companies, nyse amex,   , stock exchange,   0,  0, hoover's 1995, hoover's 1995 792, list nyse, 1995 792, stock exchanges, 1995 806, york stock exchange, -1 , nyse amex nasdaq,
Approximate Word count = 1576
Approximate Pages = 6 (250 words per page)

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