electronic stock market. "With approximately 3,300 companies, the NASDAQ lists more companies and, on average, trades more shares per day than any other U.S. market" (NASDAQ, 2006, n/p).
Therefore, the AMEX is a tangible physical entity, it occupies its own building and has physically designated space for trading - trading floor; has specifically designated members and an elected governing body. On the contrary, the NASDAQ, which means National Association of Securities Dealers Automated Quotation System, is a nebulous, intangible organization built up around the computerized system.
The American Stock Exchange, according to its own definition, is "an auction market where prices for a diverse array of products - stocks, options, exchange traded funds (ETFs) and structured products - are determined by public bids to buy and offers to sell". The major characteristics of the trading process at the AMEX include: centralization of the order flow on the trading floor, priority given to the public orders, and execution of the orders by price and time sequence regardless of size or source. (AMEX, 2006, n/p).
Like the AMEX, the NASDAQ operates as an auction market, but it has its own peculiarities: no physical trading floor is available and the orders flow goes solely through the automated quotation system. Additionally, unlike the AMEX specialists the NASDAQ dealers often maintain an inventory of the stocks that are traded less frequently.
The AMEX system includes specialists, registered traders and floor dealers:
"Trading in every Amex security is overseen by a specialist stationed on the trading floor . . . Specialists serve as facilitators, employing their extensive knowledge of the market in a security to bring together buyers and sellers, and helping them trade directly with each other. This skill is particularly important when large blocks of securities are brought to the floor" (AMEX, 2006, n/p).
On the contrary, at the NASDAQ over-the-counter market trading in a particular security is not concentrated in the hands of the one particular specialist, and there is no monopoly, as the result. Any of the dealers interested in trading in this security can handle the orders on it.
Trading at the AMEX can be performed in two ways: the orders can be processed either automatically, or manually. The automatic processing uses various systems as follows:
"Member firms may route orders directly to the Exchange's trading floor through the Common Message Switch (CMS). After performing specific validation checks, CMS routes the orders to the Amex Order File (AOF), which retains order details and directs orders to the New Equity Trading System (NETS), Amex Options Display Book (AODB), Automatic Execution (Auto-Ex), or the firm's floor broker through the Booth Automated Routing System (BARS)" (AMEX, 2006, n/p).
The orders may also be submitted manually by phone call to the broker or with help of a member firm's proprietary application:
"In both cases, immediately upon receipt, the floor broker will "systematize" the order by entering it into the Amex Order File using the order entry feature of the Booth Automated Routing System (BARS) terminal. Once "systematized" these orders may be printed and