Exchanges and Brokers

There are three big stock exchanges in the United States:

NYSE - New York Stock Exchange
AMEX - American Stock Exchange
NASDAQ - National Association of Securities Dealers
A company "lists" its stock on an exchange. For example, the NYSE has about 3,00
0 companies listed. According to the NYSE:
At the end of November, 1998, there were 3,104 companies with stock listed on th
e NYSE. These companies had over 236 billion shares worth a total of $10.1 trill
ion available for trading on the Exchange, giving the NYSE the world's largest m
arket capitalization (in global market-value terms, the total global value of th
e NYSE-listed companies exceeded $12.8 trillion).
Anyone who wants to buy or sell stock in any of these 3,000 or so companies goes
to the New York Stock Exchange to do it.
Of course, no one wants to fly to New York to buy or sell their shares. A person
therefore calls a stock broker in a firm that is authorized to trade at the exc
hange. There are dozens of such brokerage houses, including such familiar names
as Merrill Lynch, Charles Schwab and Morgan Stanley. When you call up a broker a
t one of these companies, he or she relays your trade to the floor of the approp
riate exchange, and a representative of the company (or, more commonly, a comput
er representing the company) makes the trade on your behalf. You pay the broker
a commission (generally $10 to $100 per trade, depending on the broker) to provi
de this service to you.
Stocks that are not listed on an exchange are sold Over The Counter (OTC). OTC s
tocks are generally in smaller, riskier companies. Usually, an OTC stock is stoc
k in a company that does not meet the requirements of an exchange.