Ask TheStreet: Chicago's Exchanges
08/31/06 - 11:13 AM EDT
Gregg Greenberg
Editor's Note: Ask TheStreet is designed to answer questions about the market, terms, strategies and investment methods. Please email us to ask a question, but keep in mind that we cannot offer specific investment or stock-related advice.
Could you explain the differences between the exchanges? I know about the NYSE and Nasdaq, but what are the differences between the CBOT, CBOE and the Chicago Mercantile Exchange? Thanks, E.B. In the same way that some shoppers like Wal-Mart and others prefer Target, traders choose exchanges according to their needs and tastes. And while there is some product overlap among the exchanges, creating healthy competition, not all exchanges offer the same suite of products. Both the NYSE and the Nasdaq, for example, offer stock trading, but neither offers option trading. That means traders will have to shop elsewhere for their calls and puts, like one of the six exchanges that traffic in options, namely the American Stock Exchange, International Stock Exchange(ISE Quote - Cramer on ISE - Stock Picks), the CBOE, and the Pacific, Boston and Philadelphia exchanges. (Boston and Philadelphia have regional equity-trading exchanges with long histories but low market share. The Pacific Exchange still trades options, but its stock business was purchased and merged into the NYSE Group(NYX Quote - Cramer on NYX - Stock Picks).) Even when it comes to stock trading, there are differences between the exchanges. The three New York-based stock exchanges -- the NYSE, Nasdaq and Amex -- all maintain different listing requirements and, as a result, the exchanges take on the characteristics of their member companies. The Nasdaq and Amex tend to attract more tech and biotech companies because of their more lenient entry standards when it comes to profitability. None of these exchanges deals in commodities, however. In New York, that's the domain of the New York Mercantile Exchange, which is the world's largest physical commodity futures exchange and the trading forum for energy and precious-metals contracts. The Nymex lists futures and options contracts for crude oil, gasoline, heating oil, coal, electricity, gold, silver and platinum, to name a few.
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