For those learning about stocks and trading the term “exchange” is understood as the place where buyers and sellers are brought together to buy and sell stocks. There are the face-to-face exchanges where the stocks of many huge corporations are traded like Coca Cola and General Electric. This is the world’s largest stock exchange followed closely by the Nasdaq, an Over the Counter (OTC) market which conducts all trades through computer and telecommunications networks. But beyond these two huge markets are many other exchanges that need to be mentioned as they still represent a greater percentage of all the stock trading that takes place globally.
Number 3 among the stock exchanges in the U.S. is the American Stock Exchange (AMEX). Prior to the emergence of the Nasdaq, AMEX was the only real alternative to the NYSE. In 1998 the parent company of Nasdaq, (the National Association of Securities Dealers (NASD)) purchased AMEX. Now the remaining trading that takes place on AMEX are small cap and derivative stocks.
Around the world, however, many other exchanges thrive in several countries. Though the American exchanges are still the largest of these exchanges, they don’t come close to the total number of investments that take place around the world. There are two other major financial exchanges, one in London: the “London Stock Exchange” and the exchange in Hong Kong, aptly named the “Hong Kong Stock Exchange.
The “Over-The-Counter-Bulletin Board” (OTCBB) is one more huge hub of financial trading. Unlike the other exchanges, over-the-counter markets like the OTCBB refers to smaller public companies that because of their size don’t meet the qualifications needed to be part of the regulated markets. The OTCBB is where penny stocks are traded because they allow trading with little to no regulation. This essentially means that this kind of trading can be much more risky than that which is governed by greater regulation.