Arizona
North America is home to literally dozens of active stock exchanges, from the continent’s oldest in Philadelphia to Canada’s premier market place in Toronto. If you prefer something offbeat, there are the frozen floors of the Alberta Stock Exchange in Canada’s great white north or the arid airs of the little-known Arizona Stock Exchange.
The United States has seven exchanges of note: the two primary exchanges, the New York Stock Exchange (NYSE) and the American Stock Exchange, both in New York, and five regional exchanges in Boston, Philadelphia, San Francisco, Chicago and San Diego.
The big kahuna is the NYSE. It is the world’s largest equities market, with more than 3 000 listed companies and a total market capitalisation (value) of more than $12-trillion. It is the leading marketplace for companies looking to raise money by publicly listing their shares.
The NYSE’s major index is the Dow Jones industrial average. It is prepared and published by Dow Jones and Company and is the oldest and most widely quoted of all market indicators. It is composed of 30 actively traded “blue-chip” stocks. These stocks represent 15% to 20% of the market value of NYSE stocks. The companies in the index are primarily industrials, but also include financial companies like American Express and American Telephone and Telegraph.
The NYSE’s big little brother is the American Stock Exchange (Amex). It was originally called the “Curb Exchange” because it started on the streets of New York City in the 18th century and only moved indoors in 1921.
The Amex is the only primary marketplace in the US for complex financial products known as derivatives. It is preparing to merge with another key stock exchange, the National Association of Securities Dealers (Nasdaq) market.
Trade on Nasdaq is done electronically. The vast electronic trading network has turned Nasdaq into the fastest growing stock market in the US and the world’s largest electronic market. More than 5 400 companies are traded on Nasdaq. The alliance between Amex and Nasdaq will hopefully create one of the most proficient and technologically advanced trading systems in the world, which will knock the NYSE off its plinth.
Smaller US exchanges provide market places for new and local companies that are too young or too small to meet NYSE or Amex listing requirements.
The Pacific Exchange in San Francisco specialises in technology and its index, the PSE Tech 100, is the leading benchmark for computer and information technology companies. Boston originally was a centre for New England-based banks, railroads, mills, canals and insurance companies. Its primary business today is the trading of more than 2 000 listed companies and a link with Canadian stocks traded in the US. The Chicago Stock Exchange also dealt mainly in companies based in the Midwest. Last year they traded a record 5,6-billion shares.
Canada boasts a healthy stock market tradition. The Toronto Stock Exchange (TSE), with more than 1 300 listed companies, accounts for more than 80% of the value of shares traded on Canadian exchanges. It is ranked 7th in the world according to market capitalisation, and is the second- largest exchange in North America. The TSE 300 composite index is regarded as a benchmark for Canada’s economic performance.
Also important, especially for South Africa, is the Vancouver Stock Exchange (VSE), founded in 1907 to help emerging mining and oil companies get off the ground. Its expertise is in venture capital and risk money for risky businesses. Many of these junior companies form alliances with South African companies in mining and exploration projects around the world.
Also worth mentioning are two slightly warmer exchanges in the Caribbean: one is on the island of Bermuda, the other on the Cayman Islands. Although these are tiny exchanges, they are not categorised as emerging markets since they’ve been established to capitalise on their offshore status.
Their jurisdictions are tax neutral and the absence of exchange controls provide huge advantages to some international investors looking for options outside the US or Canada.
This is the second in a series of articles about stock exchanges around the world. Next week: Western Europe