Other Markets

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In addition to the markets already discussed, which deal primarily with stock, a number of different markets exist to service the trades of derivatives, options, futures , and other stock-like investments. These niche exchanges are of great importance to their particular products, although their exchanges may not be as widely known.

The Chicago Board of Trade, for example, deals almost exclusively with the exchange of grain futures. The New York Cotton Exchange deals with cotton, of course. These specialty markets rarely make for exciting financial news, yet the Chicago Board of Trade, for example, is one of the most important exchanges in the world. A day's activity here could determine changes in the consumer price index, an indicator that measures the percentage of change of the cost of goods and services in well-developed nations and that also measures the end or beginning of famine in emerging markets.

Plain English

Remember that stock index explanation from Lesson 6, whereby an average would indicate whether the price of everything in the market had gone up? The consumer price index is the same thing, except that instead of averaging the cost of stock or a farmer's market, it averages the cost of all things the average person in this country buys, like food, clothing, and utilities.

Most of these exchanges operate on basically the same principle as the stock exchanges, but their clientele as well as their purpose are usually substantially more specific. In addition, the governing entities may be different from their stock exchange counterparts. The exchange of futures, for example, is regulated by the Commodity Futures Trading Commission (CFTC) rather than by the Securities and Exchange Commission (SEC). Like stock exchanges, these various exchanges are located around the country, in Chicago, Minneapolis, and Phil- adelphia , as well as around the world, in Paris, Winnipeg, and Sydney.

Finally, be aware that in the past the activity of these various exchanges could be a little more difficult to find. Usually only the very large financial publications such as The Wall Street Journal or corresponding local publications carried the reports . Fortunately, today's computers and dedicated financial media are so broad that information on any of these markets is usually available at the touch of a button.

The 30-Second Recap

The most powerful, prestigious, and largest physical exchange in the world is the NYSE.
The AMEX is a massive physical exchange rived by only the NYSE in power, prestige, and size .
Fourteen smaller regional exchanges that trade the stock of NYSE and AMEX as well as their own proprietary issues are located strategically around the United States.
Over the counter refers to stocks traded over a computerized network known as the National Market System. These trades compose the largest market in the world.
International exchanges are any physical exchanges located around the world, ranging from London to Johannesburg to Tokyo.
Other markets refers to specialized markets and exchanges for niche products such as grains, futures, and options.

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