The Difference Between AMEX, NYSE & NASDAQ

Stock market investors have a wide range of options and strategies available to them on their quest for profit, as well as numerous stock exchanges to choose from. The stocks of U.S. companies can be found on one of three American stock exchanges: the American Stock Exchange (AMEX), the New York Stock Exchange (NYSE) and the National Association of Securities Dealers (NASDAQ). Although all three exchanges function in a similar way and serve the same purpose, there are slight differences. Understanding the differences among AMEX, NYSE and NASDAQ can give you insight into how stock exchanges work in the U.S.

Incorporated businesses sell shares of stock to investors to raise capital. Public stock exchanges provided a marketplace for the original purchasers of stock to sell their shares to other investors, and for investors to trade shares among themselves. Independent stock exchanges operate all over the world; the NYSE, AMEX and NASDAQ are the three stock exchanges located in the United States, but they are only a few options in the global world of securities trading.

The NYSE is the largest American stock exchange by volume. Combined with Europe's Deutsche Boerse and Euronext exchanges, NYSE lists companies from around the world. Unlike NASDAQ, NYSE features a physical trading floor where registered traders conduct transactions in person on behalf of large institutions and high-value investors. The proliferation of electronic communications networks continues to shift NYSE's focus away from floor trading toward Internet-based trading platforms.

The AMEX is a smaller exchange than NYSE, and it has always been favored by smaller companies which cannot meet NYSE's strict listing and reporting requirements. The NYSE acquired AMEX in 2008, allowing investors to buy AMEX stocks alongside companies on the larger NYSE. Exchange-traded funds, mutual funds which are traded alongside stocks on open exchanges, originated on AMEX before gaining popularity around the world.

Unlike the other American exchanges, NASDAQ does not operate with a physical trading floor. NASDAQ trades take place solely online, increasing the exchange's cost efficiency and providing equal access to individual and institutional traders around the world. NASDAQ is traditionally heavy with technology stocks, since the exchange was friendly to tech startups in the early days, when most technology companies could not meet NYSE requirements. The loyalty of companies like Baidu, First Solar and Apple have pushed the NASDAQ's valuations sky-high, allowing it to take a place alongside NYSE as a major player in U.S. trading.