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9-12 The Securities Market [CH 9

Table 9.3 Requirements for Listing on the New York and NASDAQ
Stock Exchanges

New York Stock NASDAQ
Listing Requirement Exchange (NYSE) Exchange
Pretax earnings $10 million $759,000
(previous year)
Tangible assets $40 million $4 million
Publicly held shares 1.1 million 1 million
Number of shareholders 2,200 300
Minimum market value of
publicly owned shares $40 million $2 million
Minimum Stock Bid Price $4 $3

The NASDAQ and Regional Stock Exchanges
The NASDAQ (National Association of Securities Dealers Automated Quotation)
recently slipped from being the second largest stock exchange in the world to number

five. Among U.S. securities exchanges, the NASDAQ is the only one besides the
NYSE that is considered a national exchange. In many ways, it is virtually
indistinguishable from its older, larger counterpart. The NASDAQ is also located in
New York and has approximately 660 regular members and 160 associate members.

Approximately 960 securities are traded on the NASDAQ, including such well‑known
companies as Texas Air, Hasbro, Fruit of the Loom, New York Times, and Wang
Laboratories.
To be listed on the NYSE or NASDAQ, a firm must meet a number of rigorous

requirements. Table 9.3 lists these requirements. The less stringent requirements for
listing on the NASDAQ make it an attractive seasoning board for firms not ready to be
listed on the NYSE. Its listings include the common and preferred stock of
medium‑size companies and a few major companies (such as Texas Air and Wang)

that have chosen it over the Big Board. In addition, it lists corporate bonds and
government securities.
In the U.S. there are four major regional exchanges, and each has a specific
market that they focus on. They are:

 Boston: Primary focus is on mutual funds.

 Chicago: Trades regionally listed stocks, stocks from other exchanges, including
the NYSE, and NASDAQ, to service the needs of its regional financial
institutions.
 Pacific: Known for servicing the derivatives market.

 Philadelphia: Primary focus on providing a market for options from various
sectors (metals, oil, semiconductors, banks, utilities, and currency).

The total activity on the regional stock exchanges accounts for only about 10
percent of the annual dollar volume on U.S. organized exchanges.
Approximately 500 companies are listed on each of the regional exchanges. These

exchanges were originally established to trade the shares of smaller firms operating
within a limited geographic area. While many of the listed companies continue to be
smaller corporations, the regional exchanges now also list many of the major
corporations. As the volume of trading on the regional exchanges increased, larger

firms decided to list their shares there. Today, about half of all the companies listed on
the New York Stock Exchange are also listed on one or more regional exchanges.

Foreign Stock Exchanges

Stock exchanges are not unique to the United States. In fact, the world's oldest
exchange is the Amsterdam Stock Exchange, which began operations in 1611. The
London Stock Exchange, which lists more than 7,000 securities, traces its beginnings
to pre-American Revolution times.

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