The American Stock Exchange (AMEX), a self-regulating organization registered with the Securities and Exchange Commission, is the second largest stock exchange in the United States. The American Stock Exchange originated in the late 1700s and was known as the New York Curb Market. In 1921 the curb market moved indoors in lower Manhattan. In the 1940s, after struggling through the depression years, the exchange was renamed the American Stock Exchange.
The New York Stock Exchange (NYSE) is the preeminent stock exchange in the country and in the world. The AMEX is much smaller and less prestigious; in the mid- 1990s American Stock Exchange trading volume was only one-twentieth of NYSE volume. It has survived by being less expensive to list companies on the exchange and by introducing new products and services. In the 1950s the AMEX expanded into “satellite markets,” began trading in commodities and monetary instruments, and introduced automated trading. In 1975 options trading was initiated, and in 1995 the American Stock Exchange, in conjunction with Standard & Poor’s, began offering Standard and Poor’s Depository Receipts, or SPDRs, referred to as “spiders.”
SPDRs were the first stock exchange–traded mutual funds. Mutual funds accept funds from savers by selling them shares and use the proceeds to invest in various financial securities ranging from short-term debt instruments to long-term bonds and stocks. Purchasers of mutual funds own an interest in a pool of stocks or bonds. Owning an interest in a pool of assets reduces investors’ risk. Mutual funds are corporations that manage and market their securities, charging investors a management fee, usually about 1 percent of the assets. “Load” funds charge investors an up-front fee, anywhere from 1 to 5 percent of the amount invested to purchase shares in the fund. By creating exchange-traded mutual funds, the American Stock Exchange allowed investors to buy and sell mutual fund products without having to go through a mutual fund.
In 1998 the American Stock Exchange, merged with the National Association of Securities Dealers (NASD), which operates the NATIONAL ASSOCIATION OF SECURITIES DEALERS AUTOMATED QUOTATIONS (NASDAQ) system, a growing, computer-based stock-exchange system. Since the AMEX was declining and in danger of going out of business, it now operates as part of the NASD.
See also common stock, preferred stock, treasury stock.
Further reading
American Stock Exchange website. Available on-line. URL: www.amex.com.