NASDAQ vs. AMEX The American Stock Exchange (AMEX) is a mutual organization situated in New York. It is the third largest stock exchange by trading volume in the United States. It started during the colonial times as a market at the curbstone on Broad Street near Exchange Place. During that time, the stock brokers would gather around the lamp posts and mail boxes putting up lists of stocks for sale (“American Stock Exchange”). Soon their shouting got much louder so they eventually introduced hand signals to carry over their business quietly. In 1921, it moved indoors in a building where it still resides.
It conducts its trading through an advanced centralized specialist system. The companies listed on AMEX are the British American Tobacco, Imperial Oil Limited, Sea-board Corporation, and Bio-Red Laboratories(“American Stock Exchange”). NASDAQ (originally National Association of Securities Dealers Automated Quotations system) is an American electronic stock exchange founded in 1971 by the National Association of Securities Dealers (NASD). It is the world’s first electronic stock exchange(“Stanford Securities Class Action Clearinghouse Index of Filings”, 2006). It is a computerized system that facilitates trading and provides price quotations on some 5,000 of the more actively traded over-the-counter stocks (“Nasdaq”).
It started as a computer bulletin board system which does not connect buyers and sellers. As time went by, it eventually became a stock market by adding trade and volume reporting and automated trading systems(“American Stock Exchange”, 2006). NASDAQ uses sophisticated computer and telecommunications for trading transactions. It transmits timely, critical investment information to all users. The companies listed on NASDAQ include Microsoft, Intel, Dell, and Cisco. Today AMEX and NASDAQ merged as “The NASDAQ-AMEX Market Group”, where AMEX is independent of NASD. The two are both based on the stock market.
They both handle major clients and many different exchanges. They both deal with the buying and selling of stocks. They both capitalize on their investors (Ligi, 2006). The difference between the two is that NASDAQ handles everything electronically while AMEX doesn’t. AMEX is though to be slower in handling things since they still use floor exchange.
On the other hand, NASDAQ uses technology to their advantage by using sophisticated computer networks to trade. As quoted by Stewart, “AMEX says that they will never give up their floor-based specialists but NASDAQ believes they’ll wake up to reality and go completely electronic” (Ligi, 2006). On September 2002, New York State Attorney General Eliot Splitzer sued five corporate executives for repayment of funds garnered through profiteering in Initial Public offerings and phony stock ratings submitted by Salomon Smith Barney (Ligi, 2006).
Among the five corporate executives that were sued include former WorldCom, Inc., Chief Executive Bernard Ebbers. Because to this, WorldCom, formerly the second largest long-distance telephone company in the US, filed for bankruptcy. On July 2002, NASDAQ delisted the WorldCom because of concerns related to WorldCom’s bankruptcy proceeding. The WorldCom scandal resulted to the loss of investor confidence and downfall of state economies. To conclude, AMEX and NASDAQ are two similar companies in the sense that they are both based in the stock market. However, their big difference is technology. AMEX still adheres to using floor exchange while NASDAQ uses technology to their advance by transacting business through the use of sophisticated computer networks.
SOURCES:American Stock Exchange. Retrieved November 16, 2006, from http://www.dmusic.com/finance/american-stock-exchange.htmlAmerican Stock Exchange. (2006, 17 Nov. 2006). from Reference.
com http://www.reference.com/browse/wiki/American_Stock_ExchangeLigi, A. (2006).
Nasdaq vs. Amex: Stock Exchange Comparison. Retrieved November 16, 2006, from http://www.associatedcontent.com/article/19870/nasdaq_vs_amex_stock_exchange_comparison.htmlNasdaq. Retrieved November 16, 2006, from http://www.investopedia.
com/terms/n/nasdaq.aspStanford Securities Class Action Clearinghouse Index of Filings. (2006).