Stock Exchanges

• A stock exchange is a centralized location that brings corporations and governments so that investors can buy and sell equities
• Auction-based exchanges such as the New York Stock Exchange allow traders and brokers to physically and verbally communicate buy and sell orders
• Electronic exchanges take place on electronic platforms, so they don't require a centralized physical location for trades
• Electronic communication networks connect buyers and sellers directly

New York Stock Exchange (NYSE)

• The New York Stock Exchange is the world's largest equities exchange
• Although some of its functions have been transferred to electronic trading platforms, it remains one of the world's leading auction markets
• Companies listed on the NYSE have great credibility because they have to meet initial listing requirements and comply with annual maintenance requirements
• To keep trading on the exchange, companies must keep their price above $4 per share

Nasdaq

• Many exchanges now allow trading electronically
• The Nasdaq is one of the world's leading electronic exchanges
• The Nasdaq is sometimes called screen-based because buyers and sellers are only connected by computers over a telecommunications network
• The exchange has listing and governance requirements similar to the NYSE. For example, a stock must maintain a $4 minimum price

Electronic Communication Networks (ECNs)

• Electronic communication networks (ECNs) are part of an exchange class called alternative trading systems (ATSs)
• ECNs connect buyers and sellers directly because they allow a direct connection between the two; ECNs bypass market makers
• Although some ECNs allow retail investors to trade, ECNs are mostly used by institutional investors, which are firms that invest large sums for other investors such as pension fund managers

Over-the-Counter (OTCs)

• OTC markets list small companies, many of which were delisted from the main exchanges (for example, stocks lower than $4 threshold)
• There’s extra risk involved but fewer fees and administrative burden
• The first OTC is the Over-the-Counter-Bulletin Board (OTCBB). There are no quantitative minimums or no minimum annual sales or assets required to list
• The second OTC market is referred to as the Pink Sheets, a listing service that doesn't require companies to register with the Securities and Exchange Commission (SEC). Liquidity is often minimal, and these companies are not required to submit quarterly 10Qs

Other stock exchanges

There are many other exchanges located throughout the world, including exchanges that trade stocks and bonds as well as those that exchange digital.

• Asia
  • The Tokyo Stock Exchange (TSE)is the largest in Japan
  • The Shanghai Stock Exchange (SSE)is the largest in mainland China
• Europe
  • Euronext is Europe's largest stock exchange, and although it has undergone multiple mergers, it was initially formed by the mergers of the Amsterdam, Paris, and Brussels stock exchanges
  • The London Stock Exchange (LSE)is located in the United Kingdom and is the second-largest exchange in Europe.
• Digital Exchanges
  • Coinbase is the leading cryptocurrency exchange in the United States (licensed as a cryptocurrency exchange in 42 U.S. states)
  • Binance is the leading global exchange for cryptocurrencies with an average trading volume of 2 billion per day