Stock exchanges of the United States: what are they and how to invest? | Guide 2021
Did you know that … three of the most important stock exchanges in the world are located in the United States, specifically in a single city: New York …?
A Brief history…
Although Americans were not pioneers in buying and selling stocks on a stock exchange, they were certainly among the first to realize its potential. The great commercial growth of the country is due, to a great extent, to its early entry into the markets.
The first stock exchange in the United States was born with the Buttonwood agreement signed by 24 stockbrokers and merchants in 1792.
After this agreement, what is currently known as the New York Stock Exchange was created, the stock exchange par excellence in the country in charge of currently moving more than 9 million daily operations.
After the First World War, the USA stood as the first world potential, and therefore, its stock market experienced exponential growth that reflected enviable economic stability.
However, his wealth served as a facade behind which a speculative bubble was hidden. This bubble burst in 1929, plunging the country into one of the biggest economic depressions ever recorded.
After a long process and legislatures to resolve the crisis, the United States recovered and little by little the market grew again.
This was made possible by the practice of credit services, which allows Americans to buy first and pay later with interest. Another extremely important factor in the economy was and is the existing competitiveness within the country.
In fact, the United States is ranked 4th globally as one of the countries with the greatest facility to start a business, which is why it has been a historic destination for many immigrants. Thanks to the great diversity of ideas that are concentrated in the country, in the United States there are all kinds of businesses.
All of these companies, founded largely by foreigners, have evolved and grown to such an extent that they are now listed on the United States Stock Exchange.
Today there are 13 stock exchanges operating in the country, located in the cities of New York, Chicago, Miami, and Philadelphia. However, three of the most liquid markets in the world are located in the Big Apple just a few meters away. Do you know what they are and how they differ?
The New York Stock Exchanges
New York City is the financial capital of the United States and home to the most recognized Stock Exchanges. This is thanks to the fact that they are the best to invest in the long and short term.
It has a wide index of world-famous companies such as Apple, Walt Disney, Coca-Cola, Pepsi, etc.
1. New York Stock Exchange (NYSE)
Founded in 1792 (although it began its services already in 1817), it is the exchange with the largest market capitalization in the world and in the United States with $ 21.3 billion dollars.
The indices that compose it are S&P 500 Index, Dow Jones Industrials 30 Stock, Nyse Composite Index New, and Nzse Us 100 Fund.
It works with 2,800 companies such as Intel, IBM, 3M, American Express, Apple, Caterpillar, Chevron, Coca-Cola, The Home Depot, Novartis, Microsoft, Nike, McDonald’s, Walmart, Visa, Walt Disney, among others.
Its operations are supervised by the Securities and Exchange Commission (SEC), which regulates NYSE transactions.
Hours: 9:00 – 16:00 (UTC: -4)
Official website: www.nyse.com/index
2. National Association of Securities Dealers Automated Quotation (NASDAQ)
Founded in 1971, today it is known worldwide for being the first electronic stock exchange on the planet. It is the second-largest stock market capitalization in the United States and exceeds $ 9.6 trillion.
In 1992 it joined the London Stock Exchange, becoming the first intercontinental-linked exchange.
The indices that compose it are the famous Nasdaq100 (made up of the 100 most important companies in the technology sector), and the Nasdaq Composite Index, which includes all Nasdaq companies, both digital and in the financial sector, insurance, telecommunications, etc.
Currently, more than 5,000 companies in the technology, computing, telecommunications, etc. sector operate within NASDAQ, for example, Netflix, Starbucks, Cisco Systems, Google, among many more.
All its operations are supervised by Norwegian Financial Supervisory.
Hours: 9:30 AM – 4:00 PM. (UTC: -4)
Official website: new.nasdaq.com/
3. American Stock Exchange (AMEX)
It is the third-largest Stock Exchange in the United States. Founded in 1908, the AMEX trades about 10% of all US operations.
During the 1930s, it became the leading Stock Exchange in the international market and was the first Stock Exchange to introduce ETFs, which is why 140 ETFs, industries, and corporate bond indices are listed there.
Due to their less stringent listing requirements, AMEX deals with relatively small companies (compared to the Exchanges already mentioned) such as Barnwell, Avalon, Cel Sci, New Gold, and many more.
In 2008 it merged with NYSE Euronext and is supervised by the Financial Industry Regulatory Authority (FINRA).
Hours: 9:30 – 16:00 (UTC: -4)
Official website: www.nyse.com/markets/nyse-american
Other US Stock Exchanges
The rest of the US Stock Exchanges do not move the same volumes as to the New York Stock Exchanges, however, they are still very important for the country’s economy.
The Philadelphia Stock Exchange and some Chicago-based Stock Exchanges are merged with either the NYSE or the NASDAQ.
1. Chicago Board Options Exchange (Cboe)
It was founded in 1973 and has an annual volume of around 1.27 billion contracts. Around 2,200 companies, 22 stock market indices, and 140 publicly traded funds operate there.
Some of the indices that compose it are the following: CBOE Volatility Index (VIX), the CBOE S&P 500 BuyWrite Index (BXM), S&P Latin American 40 (ILF), and many more.
It is regulated by the Securities and Exchange Commission and is owned by Cboe Global Markets.
Hours: 9:30 – 16:30 (UTC: -5)
Official website: www.cboe.com/
2. Miami International Securities Exchange (MS4X)
The Miami Stock Exchange was recently founded in 2012 and is an exchange for currencies, futures and stocks, thus becoming one of the main foreign exchange markets for the 27 Stock Exchanges of Latin America and the Caribbean, known collectively as the “G27”.
It is made up of numerous well-known companies such as: Banco Patagonia, Grupo Cohen, Fortaleza Fuerza, Sociedad Comercial de Plata, among many more.
Some of its most representative indices are SPIKES, SPDR® S&P 500® ETF (SPY), T3 Index, etc.
Hours: 9:30 – 17:00 (UTC: -5)
Official website: www.miaxoptions.com/
How to invest in the US Stock Exchanges
Investing in the US markets offers many benefits since we are talking about consolidated multinationals, with a high diversification of their investments in different sectors.
To trade on these exchanges, you do not have to be a US citizen. As a European or Latin American and you can invest through:
Any CFD broker gives you access to the markets of stocks, ETFs, indices, etc. internationals, including Americans.
Some Brokers: XTB Broker, Plus500, Markets, etc.
2. Cash stocks and ETFs
You can buy stocks and ETFs (iShares Russell 2000, iShares Russell 1000 Value and Core S&P Mid-Cap ETF, etc.) in cash from North American companies through an international broker, US, a Spanish broker, or your country.
Spanish and international brokers: DEGIRO, Selfbank, ClickTrade … they give you access to the North American exchanges. Of course, it usually costs a little more expensive to buy the shares.
US brokers that accept non-US residents: TD Ameritrade and/or Interactive Brokers, among others.
3. Futures and Options
With futures and options since it is a market with great liquidity and high available assets. The most popular North American futures and options are S&P 500, Dow Jones, Nasdaq, and Russell.
Brokers: TD Ameritrade, Pepperstone, IC Markets, among others.
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