The epicentre of global finance, Wall Street is the home to the world’s largest stock exchanges: the New York Stock Exchange (NYSE), Nasdaq Stock Market (NASDAQ) and the American Stock Exchange (AMEX), which serves as a primary equity market for emerging growth companies.
What is AMEX?
The third largest stock exchange in the USA measured by trading volume, the American Stock Exchange (AMEX) handles approximately 10% of all securities traded in the United States.
The AMEX has developed a reputation of an exchange that offers new asset classes and products to trade. In 1975, it launched its options market and issued dedicated educational materials for investors to teach them all about potential risks and benefits. In 1993, the American Stock Exchange introduced the first exchange-traded fund (ETF) that, unlike mutual funds, is traded like common stocks.
The history of AMEX
Started in 1908, right on the streets near the NYSE, the AMEX was initially called the New York Curb Market. It was established to trade stocks that did not manage to meet strict listing requirements of the New York Stock Exchange.
The street life ended in 1921 when the Curb Market moved into 86 Trinity Place, Manhattan, NYC. In 1953, the market got a new name – the American Stock Exchange. Since 1920, it has been considered a leading American securities exchange for international listings.
For many years, the Amex served as a marketplace for securities that couldn’t cope with high standards of the NYSE. Later, it built the reputation of a very respectable exchange, which introduced its own listing requirements and admission standards.
In 1998, the Amex joined the National Association of Securities Dealers (NASD), the managing organization of the NASDAQ stock exchange. However, the merged companies continued to work as separate exchanges. In 2003, the American Stock Exchange got its independence back.
In 2008, the NYSE Euronext bought the American Stock Exchange (AMEX) and integrated it with the European small-cap exchange Alternext. The exchange was renamed as NYSE Alternext US and soon rebranded as the NYSE Amex Equities.
In 2013 the Intercontinental Exchange (ICE) bought NYSE Euronext. And today, the exchange is referred to as the NYSE Amex or the NYSE American Exchange.
What makes NYSE Amex popular?
The NYSE American Exchange is the key equity market exchange for emerging growth companies. AMEX offers numerous trading advantages, including:
Electronic designated market makers (e-DMMS)
Ultimate execution technology
More than 8,000 securities to trade
Competitive transaction fee structure with the costs, ranging from 0 to $0,0005
The American Stock Exchange offers some peculiar features as well, including a 350-microsecond delay mechanism, which drives midpoint trading and helps traders to enter and exit positions easily.
In addition to trading traditional stocks and bonds, the American Stock Exchange is famous for its pioneering efforts in derivatives trading. An example of a derivative that is traded on the AMEX is the S&P Depository Receipt – directly connected to the Standard & Poor’s 500 index. The Receipts can be traded the same as ordinary shares, though their price moves according to the S&P 500 index price fluctuations.
Electronic trading on the AMEX
When the AMEX owners saw that the exchange was losing its competitive position, they revitalised their trading technology to satisfy customers’ high demands.
The new era began in 2004 with the launch of the Amex New Trading Environment (ANTE) – a brand new electronic platform, which combined the qualities of an auction and electronic marketplace.
The platform was designed to improve liquidity, speed and customer access. In 2006, the AMEX started working on integrating the ANTE platform with the Amex Alternative Trading System (ATS). When the project was implemented, the American Stock Exchange became the only major stock exchange, providing numerous trading products within one trading platform.
What is NYSE Amex Composite Index?
First published on 29 December 1995, the NYSE Amex Composite Index tracks the performance of the stocks, listed on the NYSE American. The index, traded at the ticker symbol XEX, gives weight mostly to emerging growth companies.
The NYSE Amex Composite is a market capitalization-weighted index. Therefore, the biggest constituents enjoy a higher percentage weighting, while the smaller ones have a lower impact.
The index includes 250 securities with the market capitalization, ranging from $25 billion to $1.7 million.
What is the difference between the NYSE, NASDAQ and NYSE Amex?
The Wall Street threesome – the NASDAQ, NYSE and NYSE Amex – forms the foundation of the American stock market. While trading on NASDAQ is completely automated, the NYSE and the NYSE Amex has performed floor trading until recently. Though the NYSE still uses real people in its operations, the NYSE American ended floor trading in 2017.
To end up our story, let’s learn some quick facts about those three and see how they differ: