Understanding the American Stock Exchange – Money Pacers
Understanding the American Stock Exchange

Understanding the American Stock Exchange

Stock (MP) Whether you’re about to start investing on Wall Street or your business might one day go IPO, it’s important to have an understanding of the stock exchange. There are four basic stock markets in the U.S., the American Market (AMEX), the NASDAQ which has two listings, the National Marketing Systems and the Small Cap (NASDAQ: NMS and NASDAQ: SC) and the over the Counter Bulletin Board (OTC: BB).

These firms do not own shares. In fact they’re establishments, organizations or associations that serve markets for trading financial instruments namely stocks, bonds and their related derivatives. They make money in various ways. Listings, sales, and selling market statistics are some of the many ways in which they produce revenue. The Stock Exchange primary function of stock market is to help provide liquidity. Quite simply, exchanges give sellers a place to “liquidate” their share holdings (stocks).

The Four Main Markets in USA


The New York Exchange is the oldest among the firms and is known as the largest. The NYSE, which is called the Big Board, has the most stringent requirement for companies to be listed. Unlike some of the newer exchanges, the NYSE still uses a large trading floor to conduct its transactions. In an effort to ease the exchange of stocks, the NYSE employs people called specialists, who are assigned to manage the buying and selling of specific stocks.

Listing Requirements for NYSE

Unlike the AMEX that requires only a minimum of 400 to 800 shareholders, the NYSE requires a minimum of 2,000. A public company’s market cap needs to be $100,000,000 on the NYSE. You also need either pre-tax earnings of $6,500,000 over the last three years or $4,500,000 in the most recent year. Should you not meet those requirements, if you have cash flow of $25,000,000 for the last three years, or $100,000,000 in revenues in the most recent year, you may still qualify for an exemption.

The NYSE-Amex listing board also conducts a subjective review of all listing candidates looking at the:

  • Market for its products
  • Historical record and pattern of growth
  • Financial integrity
  • Future outlook


THE American Stock Exchange (AMEX) is the second-largest among the exchanges in the U.S., after the NYSE. Generally, the listing rules are less stringent than those of the NYSE, and thus the AMEX has a larger representation of smaller companies than the NYSE.

Listing Requirements for AMEX

The majority of the AMEX filings requisites require shareholder equity of $4,000,000 for companies wishing to be listed. There’s a variance for that if a company has either $75,000.000 in assets or a $75,000,000 market cap and can meet other criteria that a company with a net worth less than $4,000,000 might be listed. However, they are definitely the exception not the rule.

Other requirements

Depending on the above scenarios you meet, you must have between 400 and 800 shareholders and 500,000 and 1,000,000 shares in the public float. There is also a requirement in some cases that you must have earned $750,000 in the last two fiscal years.


The NASDAQ exchange is known as the Techie exchange. It’s where most technology companies are listed. The stock that has four letters in their symbol are NASDAQ traded stocks. NASDAQ offers two types of listings: NASDAQ Small Cap and NASDAQ National Market System (NMS). Some quotation carriers add the symbols SC and NMS in their quote to show Small Cap (NASDAQ SC: tradingXYZT) vs. National Market Systems and (NASDAQ NM: XYZT).

The NASDAQ is a computerized system established to trade by providing broker/dealers with current bid and ask price quotes on over-the counter stocks and some listed stocks. Unlike AMEX and the NYSE, the NASDAQ has no physical trading floor. Instead, all trading on the NASDAQ is performed over a network of computers and telephones. Also, the NASDAQ does not employ market specialist to buy unfilled orders, as the NYSE does. Order for stock are sent out electronically on the NASDAQ, where market makers list their buy and sell prices. Once a price is agreed upon, the transaction is executed electronically.

Requirements for Small Cap Market

NASDAQ Small Cap Market is a marketplace for securities of smaller, less-capitalized companies (small caps) that don’t qualify for inclusion in the NASDAQ National Market. Small capitalization companies can be listed on the NASDAQ Small Cap Market if they have: (1) net tangible assets of $4 million, or (2) $50 million market capitalization, or (3) net income in the latest fiscal year or two of the past three fiscal years of $750,000. In addition, these companies must have a public float of $1 million, a market value of the public float of $5 million, a minimum of 300 shareholders, and at least three market makers. Also, these companies must have an operating history of at least one year or $50 million market capitalization. The initial minimum bid price is $4.00 and the same ongoing minimum bid price and peer review requirements as are established above apply.

Requirements for National Market Systems

To be listed on the NASDAQ National Market, an organization must have net tangible assets of $6 million and net income in the latest fiscal year or two of the past three fiscal years of $1 million. In addition, these companies must have a public float of $1.1 million, a market value of the public float of $8 million, a minimum of 400 shareholders, and at least three market makers.

OTC Bulletin Board

A regulated electronic trading service offered by the National Association of Securities Dealers (NASD) that shows real-time quotes, last-sale prices and volume information for over-the-counter (OTC) equity securities. Companies listed on this exchange will need to file current financial statements with the SEC or a banking or insurance regulator. There are no listing requirements, such as those found on the NASDAQ and NYSE, but there are rules for a company to start trading on the OTCBB.

The OTCBB is not an issuer listing service, market, or exchange. It is important to note that companies listed on the OTCBB are not a part of the NASDAQ Exchange. The truth is, OTCBB stocks are not especially large or stable and are considered very risky. As a result, very few OTCBB stocks are successful in making the jump from this market to the NASDAQ or any other major exchange because they are unable to meet the listing requirements. Furthermore, because OTCBB stocks tend to trade infrequently, the bid-ask spread is larger.

Rules for OCTBB

  • Not a black check or inactive company
  • Directors, officers, and stockholders will be scrutinized for previous involvements in other OTCBB companies, in particular blank check companies,
  • Must have a market maker submit 15c211 application to NASD and agree to act as market maker for securities of company.

How do Exchanges make money?

Basically Stock Exchanges make money in four ways:

1. Transaction costs

2. Listing Fees

The beginning cost to get listed on the NYSE can run up to $250,000 – that is just to get recorded. Organizations likewise pay yearly expenses, topped at $500,000 every year and taking into account the quantity of shares recorded. To join the Nasdaq Worldwide Business sector, organizations must put aside in the middle of $125,000 and $225,000, with yearly charges in between $35,000 and $99,500.

3. Market Data

4. Technology Services

With PCs taking care of the larger part of exchanges today, the physical floor appears like an affectionate relic from the past. Trades give innovation benefits, a wide umbrella classification that incorporates framework items for customers, for example, programming, exchanging applications and stages for banks and clearinghouses. And, with this method, SE’s make roughly 5% of their income annually.

Don Briscoe
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Don Briscoe

Finance educator, advisor, and leading voice in the global financial literacy movement.Founder and editor of MoneyPacers.com.He lives and enjoys life with his family in New York.
Don Briscoe
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