The American Stock Exchange commenced its life in the 1800s as a simple outdoor market, trading securities on the sidewalk of New York’s Broad Street. The brokers developed a sequence of hand signals to conduct trades as a result of increasing noise. In 1921, the AMEX rented indoor space on Trinity Place, its present location. The official name of American-Stock- Exchange was acquired in 1953. The AMEX and the NASDAQ joined forces in 1998 to form the MASDAQ-AMEX-Market-Group. Although the two exchanges proceeded to operate separately, their combined force enabled the new group to compete with the New York Stock Exchange (NYSE) on a better footing.
Presently, the AMEX conducts almost 10% of all US trading transactions and is ranked as the third largest US stock exchange after the NYSE and NASDAQ. Although the AMEX has a diverse range of member companies, it has acquired the reputation for accepting smaller firms as its listing stipulations are not as severe as those of the other two. The AMEX once seriously rivaled the NYSE but these days its trading activities tend to be restricted to options, exchange-traded-funds and small-cap-options. The AMEX still operates separately to the NASDAQ and is owned by the National Association of Securities Dealers (NASQ).
The AMEX functions as an auction marketplace by performing business on a physical trading floor using the services of specialists and brokers. Specialists are responsible for trading particular stocks with the intent of bringing sellers and buyers together at a reasonable market price. Their other main function is to ensure constant market liquidity by using their own accounts in the absence of willing sellers or buyers. Brokers carry orders from their clients to specified specialists.
The AMEX does possess one of the largest options exchanges in the world with over 1,700 options traded on a daily basis. The AMEX also supports a significant exchange traded funds market (EFT) as it was one of the first organizations in the world to provide such a service. In excess of 140 ETFs are listed on the AMEX covering industries, general stock markets and corporate bond indexes, etc.