What is a Regional Stock Exchange?
Armin K. Sarabi | Friday, October 19, 2007 at 06:15AM Regional stock exchanges are organized national securities exchanges that are registered with the Securities Exchange Commission (SEC), and are located outside of the main financial center in New York City. These exchanges operate in the trading of regional issues, over-the-counter (OTC) equities under the SEC's Unlisted Trading Privileges (UTP), and securities listed on the New York exchanges (broadening the market for regional exchanges' securities).
Through the use of electronic trading systems - such as the Intermarket Trading System (ITS) - regional exchanges have gained strength in their competitive positions on the market.
ITS is a computer system that links regional exchanges to the major exchanges in New York City. Using ITS, regional exchanges can view competing quotes for the securities traded on a computer screen, and members in any participating market can send orders to trade at the bid or offer on any other participating market. ITS has been criticised for being out of date, and was recently replaced with the NMS Linkage Plan.
Even though these stock exchanges are regional, they are still registered with the SEC and are under the same requirements to enforce rules governing member firms under Section 19(g) of the Exchange Act as the national stock exchanges.
Every self-regulatory organization shall comply with the provisions of this title, the rules and regulations thereunder, and its own rules, and (subject to the provisions of Section 17(d) of this title, paragraph (2) of this subsection, and the rules thereunder) absent reasonable justification or excuse enforce compliance-- in the case of a national securities exchange, with such provisions by its members and persons associated with its members; in the case of a registered securities association, with such provisions and the provisions of the rules of the Municipal Securities Rulemaking Board by its members and persons associated with its members; and in the case of a registered clearing agency, with its own rules by its participants.
Regional stock exchanges were more abundant during the early to mid 1900's, however, over the years they have either merged with other exchanges or simply died out. Most recently, the Pacific Stock Exchange (PSX) closed the doors to its trading floor and its traders began trading remotely from separate offices rather than a centralized location. The exchange was later purchased by the NYSE and is now known as NYSE Arca, Inc. Additionally, Nasdaq announced its plans to purchase the Boston Stock Exchange in early October. Regional exchanges currently registered with the SEC include:
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