Trading Places
Investors may soon have a new venue for trading stocks with the newly proposed Texas stock exchange. What many investors may not know is this exchange, if approved, would join an already sizable list of US trading venues.
For example, many people know the name NYSE. But there are actually five NYSE exchanges. Two of these, the NYSE and NYSE Arca, host the bulk of the trading, averaging 2.45 billion shares in combined volume per day from May 14 through June 13. The other three (NYSE Chicago, NYSE National, and NYSE American) accounted for a combined 134 MM shares per day.
Nasdaq owns three exchanges, although the vast majority of volume for those exchanges is traded on its flagship venue, the Nasdaq Stock Market. More than 1.8 billion shares were traded on this exchange over the same period, representing about 28% of all US stock exchange trade volume.
Expertise in trading venues is an important capacity for systematic investment approaches. Individual stocks may trade on multiple exchanges, regardless of their listing. For example, about 62% of average daily exchange-traded volume for Nasdaq-listed stocks was traded on non-Nasdaq exchanges. Understanding appropriate sizing and routing of trade orders plays an important role in efficient execution.
Average Daily Trade Volume for US Stock Exchanges
May 14–June 13, 2024
This article originally appeared in Above the Fray, a weekly newsletter for Dimensional clients.
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