Exchanges

Exchanges are markets where sales of securities and commodities are transacted. Most stock exchanges are auction markets where stocks are traded through competitive bidding in a central location. The oldest stock exchanges in the United States are the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX). In 2008 AMEX was acquired by NYSE Euronext, a holding company for a number of exchanges in the U.S. and Europe, including the NYSE.

Stocks are also traded in dealer markets. Most transactions in a dealer market are between principals acting as dealers for their own accounts rather than between brokers acting as agents for buyers and sellers. One example is the NASDAQ, the first electronic stock market, introduced in 1971. NASDAQ’s dealer markets have come to more closely resemble auction markets. As with auction markets, companies must meet size and earnings requirements to trade on NASDAQ.

Over-the-counter (OTC) stocks are another segment of the securities market. OTC stocks are traditionally those of smaller companies that do not meet the listing requirements of the NYSE, AMEX or NASDAQ. They are bought and sold through brokers. OTC trading rules are written and enforced by the Financial Industry Regulatory Authority (FINRA). The number of OTC stocks dropped by 50 percent from 2,385 in September 2011 to 1,193 in September 2012, according to the OTC Bulletin Board, a quoting service for the OTC securities market in the U.S. The Dow Jones Industrial Average, a price-weighted average of a collection of industrial stocks, was introduced in 1896 and is still widely used as an indicator of stock prices today.

 

NUMBER OF EXCHANGE LISTED COMPANIES, 2002-2011

Year NASDAQ NYSE AMEX (1)
2002 3,663 2,783 698
2003 3,333 2,755 700
2004 3,271 2,768 725
2005 3,208 2,767 812
2006 3,247 2,764 821
2007 3,158 2,805 812
2008 2,954 3,507 644
2009 2,852 4,014 NA
2010 2,784 3,923 NA
2011 2,828 3,947 NA

(1) Merged with ARCA on October 1, 2008.

NA=Data not available.

Source: New York Stock Exchange, Inc.; The Nasdaq Stock Market, Inc.; ARCA/American Stock Exchange LLC; Securities Industry and Financial Markets Association.

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The New York Stock Exchange Composite Index fell 6.1 percent in 2011, after rising 10.8 percent in 2010. The Dow Jones Industrial Average rose 5.5 percent in 2011, following an 11.0 percent rise in 2010. The NYSE and Dow Jones indices dropped by 40.9 percent and 33.8 percent, respectively, in 2008 at the height of the recession.

 

EXCHANGE ACTIVITIES, 2002-2011

  NYSE ARCA/AMEX NASDAQ
Year Reported
share volume 
(millions)
Value of
shares
traded
  ($ millions)
Share volume
(millions)
Value of
shares
traded
($ millions)
Share volume
(millions)
Value of shares traded
($ millions)
2002 363,136 $10,311,156 16,063 $642,183 441,706 $7,254,595
2003 352,398 9,692,316 16,919 563,438 424,745 7,057,440
2004 367,098 11,618,151 16,513 884,100 453,930 8,727,498
2005 403,764 14,125,304 19,500 1,267,300 448,175 9,965,442
2006 453,291 17,140,500 44,515 2,364,800 500,264 11,675,879
2007 531,947 21,866,800 54,027 4,394,100 537,263 15,115,541
2008 660,168 20,855,441 146,202 6,817,600 571,613 15,104,864
2009 549,644 11,767,400 113,276 4,208,600 560,637 10,458,851
2010 444,524 11,968,700 87,249 4,025,500 552,293 12,750,993
2011 383,856 11,682,700 86,460 4,380,300 505,575 13,804,011

Source: NYSE, Inc.; ARCA/American Stock Exchange LLC; The Nasdaq Stock Market, Inc.; Securities Industry and Financial Markets Association.

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STOCK MARKET PERFORMANCE INDICES, 2002-2011

(End of year)

Year Dow Jones
Industrial Average
S&P 500 NYSE Composite AMEX Composite NASDAQ Composite
2002 8,341.63 879.82 5,000.00 824.38 1,335.51
2003 10,453.92 1,111.92 6,440.30 1,173.55 2,003.37
2004 10,783.01 1,211.92 7,250.06 1,434.34 2,175.44
2005 10,717.50 1,248.29 7,753.95 1,759.08 2,205.32
2006 12,463.15 1,418.30 9,139.02 2,056.43 2,415.29
2007 13,264.82 1,468.36 9,740.32 2,409.62 2,652.28
2008 8,776.39 903.25 5,757.05 1,397.53 1,577.03
2009 10,428.05 1,115.10 7,184.96 1,824.95 2,269.15
2010 11,577.51 1,257.64 7,964.02 2,208.38 2,652.87
2011 12,217.56 1,257.60 7,477.03 2,278.33 2,605.15

Source: Securities Industry and Financial Markets Association.

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