American Stock Exchange

8/9/2019 American Stock Exchange

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Assignment No 03

Program MBA (Banking & finance)

Section: (A)

Submitted to: Sir Jameel

Subject: Investment

Submitted by: Jalil khan

Enrollment no 2008-A30


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(AMEX) is an American stock exchange situated in New York. AMEX was a mutualorganization, owned by its members. Until 1953 it was known as the New York CurbExchange. On January 17, 2008 NYSE Euro next announced it would acquire the

American Stock Exchange for $260 million in stock. On October 1, 2008, NYSE Euronext completed acquisition of the American Stock Exchange. Before the closing of theacquisition, NYSE Euro next announced that the Exchange would be integrated with theAlter Next European small-cap exchange and renamed the NYSE Alter next U.S. InMarch 2009, NYSE Alter next U.S. was changedto NYSE Amex Equities.

In the early nineteenth century, many newenterprises sprang up in the railroad andconstruction industries. The New YorkExchange Board had then mandated an

organization to have a minimum of 100 stocks inorder to trade in their exchange. Many of thesenew companies could not meet suchrequirements to be listed on the Board. A groupof non-member brokers catered to the needs ofthese companies as they traded their stocksoutside the registered exchanges. These brokerscame to be known as the curbstone brokers, asthey conducted their auctions out in the street.

These brokers often traded stocks that were

speculative in nature. With the discovery of oilin the later half of nineteenth century, even oilstocks entered into the curb market. By 1865, following the Civil War, stocks in smallindustrial companies, such as iron and steel, textiles and chemicals were first sold bycurbstone brokers. Efforts to organize and standardize the market started early in thetwentieth century under Emanuel S Mendels. In 1908, the New York Curb MarketAgency was established, to codify trading practices. In 1911, the curbstone brokers cameto be known as the New York Curb Market, which then had a formal constitution withbrokerage and listing standards. After several years of outdoor trading, the curbstonebrokers moved indoors in 1921 to a building on Greenwich Street in Lower Manhattan. In1929, the New York Curb Market changed its name to the New York Curb Exchange.

Within no time, the Curb Exchange became the leading international stock market, listingmore foreign issues than all other U.S. securities markets combined. In 1953 the CurbExchange was renamed the American Stock Exchange.

The American Stock Exchange merged with the New York Stock Exchange (NYSE Euronext) on October 1, 2008. Post merger, the Amex equities business was branded "NYSEAlter next US." On December 1, 2008, the Curb Exchange building at 86 Trinity Place


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was closed, and the Amex Equities trading floor was moved to the NYSE Trading floor at11 Wall St.

The, also known as the NASDAQ, is an American stock exchange. "NASDAQ"originally stood for "National Association of Securities Dealers Automated Quotations,"but the exchange's official stance is that the acronym is obsolete. It is the largestelectronic screen-based equity securities trading market in the United States and fourthlargest by market capitalization in the world. With approximately 3,700 companies andcorporations, it has more trading volume than any other stock exchange in the world.

It was founded in 1971 by the National Association of Securities Dealers (NASD), whodivested themselves of it in a series of sales in 2000 and 2001. It is owned and operatedby the NASDAQ OMX Group, the stock of which was listed on its own stock exchangebeginning July 2, 2002, under the ticker symbol NASDAQ: NDAQ. It is regulated by theSecurities and Exchange Commission.

With the completed purchase of the Nordic-based operated exchange OMX, following itsagreement with Borse Dubai, NASDAQ is poised to capture 67% of the controlling stakein the aforementioned exchange, thereby inching ever closer to taking over the companyand creating a trans-atlantics powerhouse. The group, now known as NASDAQ-OMX,controls and operates the NASDAQ stock exchange in New York City the second

largest exchange in the United States. It also operates eight stock exchanges in Europeand holds one-third of the Dubai Stock Exchange. It has a double-listing agreement withOMX, and will compete with NYSE Euro next group in attracting new listings.

When the NASDAQ stock exchange began trading on February 8, 1971, the NASDAQwas the world's first electronic stock market. At first, it was merely a computer bulletinboard system and did not actually connect buyers and sellers. The NASDAQ helpedlower the spread (the difference between the bid price and the ask price of the stock) butsomewhat paradoxically was unpopular among brokerages because they made much oftheir money on the spread.

NASDAQ was the successor to the over-the-counter (OTC) system of trading. As late as1987, the NASDAQ exchange was still commonly referred to as the OTC in media andalso in the monthly Stock Guides issued by Standard & Poor's Corporation.

Over the years, NASDAQ became more of a stock market by adding trade and volumereporting and automated trading systems. NASDAQ was also the first stock market in theUnited States to advertise to the general public, highlighting NASDAQ-traded companies(usually in technology) and closing with the declaration that NASDAQ is "the stock


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market for the next hundred years." Its main index is the NASDAQ Composite, which hasbeen published since its inception. However, its exchange-traded fund tracks the large-cap NASDAQ-100 index, which was introduced in 1985 alongside the NASDAQ 100Financial Index.

Until 1987, most trading occurred via the telephone, but during the October 1987 stockmarket crash, market makers often didn't answer their phones. To counteract this, theSmall Order Execution System (SOES) was established, which provides an electronicmethod for dealers to enter their trades. NASDAQ requires market makers to honor tradesover SOES.

In 1992, it joined with the London Stock Exchange to form the first intercontinentallinkage of securities markets. NASDAQ's 1998 merger with the American StockExchange formed the NASDAQ-Amex Market Group,and by the beginning of the 21st century it had becomethe largest electronic stock market (in terms of both

dollar value and share volume) in the United States.NASD spun off NASDAQ in 2000 to form a publiclytraded company, the NASDAQ Stock Market, Inc.

On November 8, 2007, NASDAQ bought thePhiladelphia Stock Exchange (PHLX) for US$652million. PHLX is the oldest stock exchange in Americahaving been in operation since 1790.

To qualify for listing on the exchange, a company mustbe registered with the SEC, have at least three market

makers (financial firms that act as brokers or dealers forspecific securities) and meet minimum requirements forassets, capital, public shares, and shareholders.

The (NYSE) is a stock exchange located at 11 Wall Street in lower Manhattan, New YorkCity, USA. It is the world's largest stock exchange by market capitalization of its listed

companies at US$12.25 trillion as of May 2010.Average daily trading value wasapproximately US$153 billion in 2008.

The NYSE is operated by NYSE Euro next, which was formed by the NYSE's 2007merger with the fully electronic stock exchange Euro next. The NYSE trading floor islocated at 11 Wall Street and is composed of four rooms used for the facilitation of


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trading. A fifth trading room, located at 30 Broad Street,was closed in February 2007. The main building, locatedat 18 Broad Street, between the corners of Wall Streetand Exchange Place, was designated a National HistoricLandmark in 1978,as was the 11 Wall Street building.

The origin of the NYSE can be traced to May 17, 1792,when the Buttonwood Agreement was signed by 24stock brokers outside of 68 Wall Street in New Yorkunder a buttonwood tree on Wall Street. On March 8,1817, the organization drafted a constitution andrenamed itself the "New York Stock & ExchangeBoard." Anthony Stockholm was elected the Exchange'sfirst president.

The first central location of the Exchange was a room, rented in 1792 for $200 a month,

located at 40 Wall Street. After that location was destroyed in the Great Fire of New Yorkin 1835, the Exchange moved to a temporary headquarters. In 1863, the New York Stock& Exchange Board changed to its current name, the New York Stock Exchange. In 1865,the Exchange moved to 10-12 Broad Street.

The volume of stocks traded increased six fold in the years between 1896 and 1901, and alarger space was required to conduct business in the expanding marketplace. Eight NewYork City architects were invited to participate in a design competition for a newbuilding; ultimately, the Exchange selected the neoclassic design submitted by architectGeorge B. Post. Demolition of the Exchange building at 10 Broad Street, and adjacentbuildings, started on May 10, 1901.

The new building, located at 18 Broad Street, cost $4 million and opened on April 22,1903. The trading floor, at 109 140 feet (33 42.5 m), was one of the largest volumesof space in the city at the time, and had a skylight set into a 72-foot (22 m)-high ceiling.The main faade of the building features six tall Corinthian capitals, topped by a marblesculpture by John Quincy Adams Ward, called Integrity Protecting the Works of Man.The building was listed as a National Historic Landmark and added to the NationalRegister of Historic Places on June 2, 1978.

In 1922, a building for offices, designed by Trowbridge & Livingston, was added at 11Broad Street, as well as a new trading floor called the Garage. Additional trading floorspace was added in 1969 theBlue Room, and in 1988 theEBR orExtended Blue Room,with the latest technology for information display and communication. Yet anothertrading floor was opened at 30 Broad Street called theBond Room in 2000. As the NYSEintroduced its hybrid market, a greater proportion of trading came to be executedelectronically, and due to the resulting reduction in demand for trading floor space, theNYSE decided to close the 30 Broad Street trading room in early 2006. As the adoptionof electronic trading continued to reduce the number of traders and employees on thefloor, in late 2007, the NYSE closed the rooms created by the 1969 and 1988 expansions.


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The Stock Exchange Luncheon Club was situated on the seventh floor from 1898 until itsclosure in 2006.

The floor of the New York Stock Exchange in 1908

The NYSE announced its plans to acquire Archipelago on April 21, 2005, in a dealintended to reorganize the NYSE as a publicly traded company. NYSE's governing boardvoted to acquire rival Archipelago on December 6, 2005, and become a for-profit, publiccompany. It began trading under the name NYSE Group on March 8, 2006. A little overone year later, on April 4, 2007, the NYSE Group completed its merger with Euro next,the European combined stock market, thus forming the NYSE Euro next, the firsttransatlantic stock exchange.

Presently, Marsh Carter is Chairman of the New York Stock Exchange, having succeededJohn S. Reed and the CEO is Duncan Niederauer, having succeeded John Thain.

TheorTSE for short, is located in Tokyo, Japan and is the second largest stock exchangein the world by aggregate market capitalization of its listed companies, second only to theNew York Stock Exchange. The Tokyo Stock Exchange had 2,414 listed companies witha combined market capitalization of US$3.1 trillion as of May 2010.

The TSE is incorporated as a kabushiki kaisha with nine directors, four auditors and eightexecutive officers. Its headquarters are located at 2-1 Nihombashi Kabutocho, Ch,Tokyo. "Kabutocho" is the largest financial district in Japan. Its operating hours are from

9:00 to 11:00 am, and from 12:30 to 3:00 pm. From April 24, 2006, the afternoon tradingsession started at its usual time of 12:30 p.m.
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Stocks listed on the TSE are separated into the First Section for large companies, theSecond Section for mid-sized companies, and the Mothers (Market of the high-growthand emerging stocks) section for high-growth startup companies. As of April 2, 2010,there are 1,685 First Section companies, 446 Second Section companies and 186 Mothers

companies.

The main indices tracking the TSE are the Nikkei 225 index of companies selected by theNihon Keizai Shimbun (Japan's largest business newspaper), the TOPIX index based onthe share prices of First Section companies, and the J30 index of large industrialcompanies maintained by Japan's major broadsheet newspapers.

89 domestic and 19 foreign securities companies participate in TSE trading. See:Members of the Tokyo Stock Exchange

Other TSE-related institutions include:

The exchange's press club, called the Kabuto Club (Kabuto kurabu), which meetson the third floor of the TSE building. Most Kabuto Club members are affiliatedwith the Nihon Keizai Shimbun, Kyodo News, Jiji Press, or business televisionbroadcasters such as Bloomberg LP and CNBC. The Kabuto Club is generallybusiest during April and May, when public companies release their annualaccounts.

On 15 June 2007, the TSE paid $303 million to acquire a 4.99% stake in SingaporeExchange Ltd.

The Tokyo Stock Exchange was established on May 15, 1878, as the Tokyo KabushikiTorihikijo under the direction of then-Finance Minister Okuma Shigenobu and capitalistadvocate Shibusawa Eiichi. Trading began on June 1, 1878.

In 1943, the exchange was combined with ten other stock exchanges in major Japanesecities to form a single Japanese Stock Exchange (Nippon Shken Torihikisho?). Thecombined exchange was shut down and reorganized shortly after the bombing ofNagasaki.
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The Tokyo Stock Exchange reopened under its current Japanese name on May 16, 1949,pursuant to the new Securities Exchange Act.

The TSE runup from 1983 to 1990 was unprecedented, in 1990 it accounted for over 60%of the world's stock market capitalization (by far the world's largest) before falling

precipitously in value and rankings today, but still remains one of the 3 largest exchangesin the world by market capitalization of listed shares.

The trading floor of the TSE was closed on April 30, 1999, and the exchange switched toelectronic trading for all transactions. A new facility, called TSE Arrows (TshArrows?), opened on May 9, 2000.

In 2001, the TSE restructured itself as a stock company: before this time, it was structuredas an incorporated association (shadan hjin?) with its members as shareholders.

I.T. issues

The exchange was only able to operate for 90 minutes on November 1, 2005, due to bugswith a newly installed transactions system, developed by Fujitsu, which was supposed tohelp cope with higher trading volumes. The interruption in trading was the worst in thehistory of the exchange. Trading was suspended for four-and-a-half hours.

During the initial public offering of advertising giant Dentsu, in December 2001, a traderat UBS Warburg, the Swiss investment bank, sent an order of 610,000 shares in thiscompany at six yen each, while he intended to sell 16 shares at 610,000 yen each. Thebank lost 71 million.

During yet another initial public offering, that of J-Com, on December 8, 2005, anemployee at Mizuho Securities Co., Ltd. mistakenly typed an order to sell 610,000 sharesat 1 yen, instead of an order to sell 1 share at 610,000 yen. Mizuho failed to catch theerror; the Tokyo Stock Exchange initially blocked attempts to cancel the order, resultingin a net loss of 347 million US dollars to be shared between the exchange and Mizuho.Both companies are now trying to deal with their troubles: lack of error checking, lack ofsafeguards, lack of reliability, lack of transparency, lack of testing, loss of confidence,and loss of profits. On 11 December, the TSE acknowledged that its system was at faultin the Mizuho trade. On 21 December, Takuo Tsurushima, chief executive of the TSE,and two other senior executives resigned over the Mizuho affair.

On January 17, 2006, the Nikkei 225 fell 2.8%, its fastest drop in nine months, asinvestors sold stocks across the board in the wake of a raid by prosecutors on internetcompany livedoor. The Tokyo Stock Exchange closed early on January 18 due to thetrade volume threatening to exceed the exchange's computer system's capacity of 4.5
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million trades per day. This was called the "livedoor shock." The exchange quicklyincreased its order capacity to five million trades a day.

Recent logarithmic graph of the DJIA from Jan 2000 through Oct 2009.

Historical logarithmic graph of the DJIA from the 1890s to the 2010s.

The Dow Jones Industrial Average, also referred to as the Industrial Average, the DowJones, the Dow 30, or simply the Dow, is a stock market index, and one of severalindices created by Wall Street Journal editor and Dow Jones & Company co-founderCharles Dow. The average is named after Dow and one of his business associates,statistician Edward Jones. It is an index that shows how 30 large, publicly ownedcompanies based in the United States have traded during a standard trading session in thestock market. It is the second oldest U.S. market index after the Dow JonesTransportation Average, which Dow also created.

TheIndustrialportion of the name is largely historical, as many of the modern 30components have little or nothing to do with traditional heavy industry. The average isprice-weighted, and to compensate for the effects of stock splits and other adjustments, itis currently a scaled average. The value of the Dow is not the actual average of the pricesof its component stocks, but rather the sum of the component prices divided by a divisor,which changes whenever one of the component stocks has a stock split or stock dividend,so as to generate a consistent value for the index.
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Along with the NASDAQ Composite, the S&P 500 Index, and the Russell 2000 Index,the Dow is among the most closely watched benchmark indices tracking targeted stockmarket activity. Although Dow compiled the index to gauge the performance of theindustrial sector within the American economy, the index's performance continues to beinfluenced by not only corporate and economic reports, but also by domestic and foreignpolitical events such as war and terrorism, as well as by natural disasters that couldpotentially lead to economic harm. Components of the Dow trade on both the NASDAQOMX and the NYSE Euronext, two of the largest stock market companies. Derivatives ofthe Dow trade on the Chicago Board Options Exchange and through CME Group, the

world's largest futures exchange company, which owns 90% of the indexing businessfounded by Dow Jones, including the Industrial Average.

Simple. NASDAQ Stock Market, Inc and NASDAQ the stock market are related, but notthe same thing. NASDAQ Stock Market, Inc. is the full incorporated name of thecompany that owns the NASDAQ stock exchange. However, that does not mean theNASDAQ stock exchange is the ONLY stock exchange the NASDAQ Stock Marketowns or may own. Currently, NASDAQ Stock Market, Inc. is in discussions to buy outother stock exchanges, and owns a 30% stake in the London Stock Exchange. That iscompletely irrelevant as to the "NASDAQ" stock EXCHANGE page. The Revenue,employees, etc, are all completely irrelevant to the NASDAQ stock exchange page.

However, for those interested in investing in the company, I.E. NDAQ, they may beuseful. Suppose NASDAQ Stock Market, Inc. bought the rest of the London StockExchange company. The London stock exchange would have its own page, and itshistory. The NASDAQ Stock Exchange would have its own page, and its history. TheNASDAQ Stock Market, Inc. would have its own page, listing that it owns both theNASDAQ Stock Exchange, and its own page, and how much revenue it made the lastquarter.

I was under the impression that the average investor isn't allowed to invest in leveragedETFs on margin anymore. Shouldn't that entire discussion now be removed from thatsection? In any case, it has nothing to do with the Dow Industrials; it has to do with

investing on margin. AllGloryToTheHypnotoad 16:17, 26 June 2010 (UTC)

What you are saying is indeed true. New rules instituted by the SEC in either late 2009 orearly 2010 (I don't exactly recall) currently forbid margin use on leveraged ETFs. Due tothe volatility experienced in the 2008 stock market downfall, the authorities would notallow an investor to potentially be exposed to large price movements from many doubleand triple leveraged ETFs which has become commonplace. So in fact, under the newregulations, its not possible to leverage your money say, 600% on a triple ETF; or 400%


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on a double ETFeven though at one time in the past it was allowed.) 14:00, 28 June2010 (UTC)The reason there were two different threshold numbers, 4.5 million executions and 8.0orders, is that the two different internal TSE systems had different processing limits. Theorder and execution system had a limit of 8.0 mil orders placed, but only 4.5 mil

executions could be settled through the JASDEC DVP interfaces. The second removal ofthis fact from the article is a disimprovement. And for those of you who need externalevidence

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American Stock Exchange