Better Alternative Trading System (BATS)

Finance a la Shmoop. What are the NASDAQ and the NYSE? Nasdaq, yeah it stands for

National Association of Securities Dealers Automated Quotation-systems. And [NASDAQ defined]

yeah, it feels like they got cheated out of an S in there somewhere, like NASDAQ'S.

That's what happens when life's on a budget. So NASDAQ is an electronic

version of the original wall, as in Street, Wall Street, yah that. Where

well-dressed folks would come with cash in hand scream out a stock and a price [stock market in 1900s]

and then trade shares. They would trade for whatever was trending at the time. Like

eyeball massagers, or wooden swimsuits, or motorised surfboards, all real things

by the way. NASDAQ is the much more modern version of its predecessor NYSE.

Is anything but nice when you lose money there. NYSE stands for New York

Stock Exchange and it too was an outgrowth of the well-dressed folks at

the wall. There are two key structural differences in the two trading systems,

the NYSE is an actual physical place, has a physical location, address, etc. and this [NYSE Building]

is what it looks like. NASDAQ is really a concept, a religion, a

network, it's not really a place. At least not a geographic place. The other big

difference is the manner in which shares are traded. The NYSE is an auction-based

system, one individual is a buyer of AMZN at $983.25, he screams electronically

that number and then buys from whoever is willing to sell at that price.

Individuals buy from individuals. That's an auction market. But NASDAQ is a

dealer market, that is somebody deals in the stock. They go out into the market[online stock market]

and buy say a million shares of whatever.com that was bought in the market

conveniently for exactly ten bucks even. That dealer now makes a market in that

stock, ie the dealer is kind of you know, their own individual market. And she

moves with the market to manage the spread in the trades. Like she might have

a narrow spread, where she's a buyer of the stock at $10.02 and a seller of the

stock at $10.07 a share. Or it's a really wild volatile stock, on a wild and [man and woman on rollercoaster]

volatile day, she might be a buyer only at $9.90 and a seller at $10.30, making 40

cents a share trade. Well you could do the fancy math that if she

keeps her inventory steady at a million shares and trades a million shares that

day. Well with that spread she makes 40 cents times a million or 400 grand for

the day's efforts. However after staring at a screen all day she's gonna have to

spend at least some of that money on eye care. [woman in office]

Thank goodness for those eyeball massagers.