AMEX vs NASDAQ - Similarities and Differences Assignment

AMEX vs NASDAQ - Similarities and Differences - Assignment Example To start off both Amex and NASDAQ are companies that are based on the stock market. Both handle major clients and conduct transactions with many different exchanges. Both also deal with the buying and selling of stocks. As regards to the popularity, each is widely known and capitalizes on their investors.While similarities exist, both corporations do have obvious differences. The major point of difference is that Amex uses floor exchange methodology; a specialist system with a centralized limit order book while NASDAQ employs an electronic listing of competing dealer quotes. This difference leads on to other differences such as transaction processing time (slower in the case of Amex) and efficiency.As mentioned earlier the AMEX is an order-driven continuous auction market, the foundation stone of which are the market makers or â€Å"specialists†. The work of the specialists is to facilitate continuous trading by posting quotes for their own account or by offering the best quot es on their limit order book, which represent a centralized depository for limit orders to buy or sell stocks at specified rates or better. Limit orders provide immediate liquidity and their importance on the AMEX can be judged by the fact that nearly 88% of the volume on AMEX arises from trades in which the specialists do not participate for their own account. But specialists in the AMEX are not allowed to trade ahead of limit orders at the same prices so their quotes usually reflect the limit order book. The result is temporarily stale limit prices (in the initial stages) after public announcements. This slow updating of limit orders can delay revisions in the best bid and ask quotes.