Chapter 11. The U.S. Equity Markets

FRANK J. JONES, PhD

Professor, Accounting and Finance Department, San Jose State University and Chairman of the Investment Committee, Salient Wealth Management, LLC

FRANK J. FABOZZI, PhD, CFA, CPA

Professor in the Practice of Finance, Yale School of Management

Abstract: At the beginning of the twenty-first century, the world's stock exchanges were a complex of separate, independent, single-product exchanges. During the first part of this century, however, these exchanges have become interconnected within and across country lines and have become multiproduct exchanges. That is, some of the world's stock exchanges have become international, multiproduct exchanges. The exchanges have and will continue to change rapidly, both diversifying and integrating. In addition to the sanctioned stock exchanges, the off-exchange markets have become much more important in their size and diversity. The U.S. stock market has become a complex of interconnected exchanges and off-exchange markets.

Keywords: market structure, order driven, quote-driven, market orders, limit orders, bid quote, offer quote, pure order-driven market, natural buyers, natural sellers, continuous market, call auction, brokers, agents, dealers, market makers, principals, specialist, national best bid and offer (NBBO), hybrid markets, system orders, floor brokers, commission broker, limit order book, competitive-dealer quote-based system, off-exchange markets, alternative electronic markets, electronic ...

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