What Are The Different Types Of Security Exchanges

Security exchanges are characterized by a countless number of securities getting traded regularly every second between scores of traders, companies, and firms. If the Companies put their shares on sale in the exchange and aim to raise funds for growth and surplus cash profit. When a company decides to get listed in the exchange for trading, it can opt to trade in one or more securities exchanges. Selling, reselling, and purchasing of securities like stocks, bonds, and other investment vehicles happen in these exchanges without break in the live hours.

Exchanges are of different types and let us note the major types.

 

Organized Securities Exchanges

Tangible Exchanges where outstanding securities are resold are called organized exchanges and are known as secondary markets. The most common example of organized exchange is the New York Stock Exchange (NYSE), which constitutes almost 93 percent of the total dollar volumes of traded shares. Other examples are American Stock Exchange, Chicago Stock Exchange, and Pacific Stock Exchange.

If you want to list your company is an organized exchange, there are certain requirements to be met in terms of the number of publicly held shares, stockholders owning a specified number, say 100 shares, equity, and pretax earnings.

Transactions are said to be done on the ‘Floor’ of the exchange for which you have to own a seat. If you are a trader, read more about Crypto Code and other trading brokers who own seats in NYSE.

 

International Capital Markets

The debt market outside the US is the Eurobond market, the foreign bond market is an international market for long-term financing assets and the equity market outside the US selling blocks simultaneously in many countries is the International equity market. In the former market, governments, and corporations issue bonds denominated in dollars that are sold to non-US investors.

 

Over-the-counter (OTC) Exchanges

These are intangible exchanges where securities which are not listed in organized exchanges are sold and purchased through competitive bid and negotiation.  The traders who wish carry out transactions on the securities are called dealers and are linked to the sellers and purchasers through the Nasdaq system. Nasdaq stands for National Association of Securities Dealers Automated Quotation. Trade takes place through bids and among thousands of bids placed in a short time, and the best bid takes the security. The bid price is the best price offered by a dealer to buy the security and ask price is the lowest price at which a dealer is ready to sell it. The difference between these two prices is called spread and this is where the dealer tries to cash in.