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September 30, 1998

A Breakdown of the Eight U.S. Stock Exchanges

By Michael L. O'Reilly

Traditionally, U.S. stock exchanges competed for listings. The New York Stock Exchange and the American Stock Exchange listed large national companies. The regional stock exchanges supported small local companies.

But companies began to turn to the NYSE and the AMEX for trading, and the regionals were forced to consolidate amid declining profitability. Four decades ago, there were 21 stock exchanges in the U.S. Last year there were eight.

In 1971, the National Association of Securities Dealers launched Nasdaq, a floorless, multiple market-maker system that attracted small-cap listings.

To survive, the regionals began to trade stocks primarily listed on the NYSE and the AMEX, linked to the primary markets by the Intermarket Trading System.

Paying for order flow, the regionals have been able to attract retail orders away from the primary markets. And the NYSE's so-called Rule 390 has provided regionals with a steady flow of block orders.

With technology speeding the growth of electronic trading, the regionals are consolidating into lower-cost structures. The NASD with Nasdaq and its proposed partnership with the AMEX is set to compete with the NYSE. With foreign companies looking to the U.S. for exposure, the NYSE and Nasdaq are positioning to accommodate foreign listings and growth overseas.

New York Stock Exchange

The NYSE is, quite simply, the world's premier exchange. The 206-year-old, floor-based auction market is the home of 3,104 companies listing 3,749 issues. The Big Board averages 652.3 million shares each day, and has 1,366 seats. The last seat sold on September 22 for $1.18 million.

Nasdaq

Nasdaq was launched in 1971 by the NASD. Traditionally, Nasdaq issued small-cap stocks in its floorless, multiple market-maker environment. But as the exchange has grown, its own blue-chip listings offer competition for the NYSE. Nasdaq lists 5,984 issues, and had an average daily volume of 749.82 million shares in August.

American Stock Exchange

The AMEX lists 781 companies and averaged 32.69 million shares daily in August. Aside from offering equities in a floor-based environment, the AMEX has a viable options business, trading 371,667 contracts in August. There are 661 regular seat members, and 203 seats for options only. The last regular seat sold in September for $405,000. With its agreement to merge with the NASD, the AMEX will likely undergo major changes.

Boston Stock Exchange

Averaging nearly 10.3 million shares a day in 1998, the BSE will move its operations to a new, state-of-the-art trading floor in 1999. Founded in 1834, the BSE has 203 seats, and trades more than 2,000 issues. The last seat sold on July 27 for $25,000.

Chicago Stock Exchange

Founded in 1882, the former Midwest Stock Exchange primarily trades NYSE, Nasdaq and AMEX-listed securities. The 185-employee CHX has 445 seats and 4,092 listings. In August, average daily volume was 37 million shares. The most recent sale of a CHX seat on August 31 made $45,000.

Cincinnati Stock Exchange

The CSE doesn't have a trading floor, and isn't located in Cincinnati. The electronic exchange, founded in 1885, moved its headquarters from Cincinnati to Chicago in 1991. Along with the BSE, the CSE is the only regional that allows multiple specialists on a single stock. The CSE averages roughly 7.5 million shares a day, and lists close to 600 issues. The CSE has 237 seats, the last selling for $7,500.

Pacific Exchange

The PCX is the only U.S. exchange operating two floors, in Los Angeles and San Francisco. Founded in 1882, the PCX has 552 seats and 2,700 equity issues. It also trades 785 options. The most recent seat sale on September 28 went for $365,000. The PCX had an average daily equity volume of 14 million shares in August, and a daily options volume of 228,000 contracts. It was the options business that attracted the Chicago Board Options Exchange as a partner.

Philadelphia Stock Exchange

The PHLX is the nation's oldest stock exchange, founded in 1790. The 505-seat exchange trades 2,600 equity issues and 800 options. In August, the PHLX had an average daily equity volume of 6.62 million shares, and a daily options volume of 147,718 contracts. The PHLX entered an agreement to merge with the American Stock Exchange and the National Association of Securities Dealers in June. The last PHLX seat fetched $200,000.