Where the stock is listed
If the stock you're buying or selling
is listed on the
New York Stock Exchange (NYSE),
the
American Stock Exchange (AMEX),
or one of the regional stock
exchanges (Boston, Philadelphia, Chicago, Cincinnati, Pacific),
your broker can send your order to the exchange where it is listed,
one of the other exchanges, or to a brokerage firm known as a
third market maker. NASDAQ-listed stocks may go to a NASDAQ
market maker, directly to one of NASDAQ's trading systems,
to an electronic communications network (ECN), or, in some cases,
to a regional exchange for execution.
Market differences
 Exchanges are auction markets, where a
specialist
handles the transactions in a particular stock and keeps the trading
active by buying or selling if there's no buyer for a sell
order, or vice versa. Each time a share price moves, it's
known as a tick — an
uptick
if the price increases and a
downtick
if it drops.
Market makers form a dealer market where
they compete to fill investor orders by offering to buy or sell
specific quantities of stocks at specific prices. On an ECN, also
known as an electronic match market, buy and sell orders at the
same price are matched automatically and anonymously, eliminating
the bidding process that's characteristic of both auction
and market-maker markets. |
