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What is the National Stock Exchange?

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  • Written By: Toni Henthorn
  • Edited By: W. Everett
  • Last Modified Date: 03 December 2016
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    Conjecture Corporation
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Formerly the Cincinnati Stock Exchange, the National Stock Exchange (NSX) is a fully automated, electronic securities exchange in Chicago, Illinois. Founded in 1885 by an assembly of Cincinnati businessmen, the stock exchange relocated to Chicago in 1995. The Cincinnati Stock Exchange officially converted its name to the National Stock Exchange in 2003. In 1975, amendments to the Securities and Exchange act permitted the National Stock Exchange to exchange its physical trading floor for its all-electronic trading platform in 1980, the first of its kind in the United States. About one decade later, the National Stock Exchange, which manages about 20 percent of all NASDAQ-traded stock issues, introduced the Intermarket Trading System (ITS), an electronic communications network that links the trading floors of all seven major exchanges, which allows NSX members to obtain the best stock prices across all seven exchanges for their clients.

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Known for several innovations in the securities exchange arena, the National Stock Exchange was the first major exchange to initiate audit trails on electronic orders in 1993. In 1998, the NSX set up the first trade-reporting facility (TRF) to provide incentives to brokers to report off-exchange internal trades to the exchange for a percentage of the revenue, as much as 50 percent. Internalized trades comprise about 16 percent of the volume in New York Stock Exchange stocks and 30 percent of the volume in NASDAQ’s listed securities. Experts estimate that the off-exchange segment of market-data revenue exceeds $20 million US Dollars (USD) annually.

In late 2006, the National Stock Exchange launched NSX BLADE. This system was a totally new technology platform that offered unparalleled speed, precise price-time precedence, competitive pricing, and a streamlined order delivery system. Other notable features include quick expansion in peak volume periods, a variety of connectivity options, and anonymity throughout the order process. The new system is widely recognized for its ability to provide a low-latency trading platform with a superior level of performance.

Also in 2006, the National Stock Exchange transformed into a for-profit corporation, receiving large investments from six large Wall Street firms. The NSX opened a second headquarters in New Jersey, to provide an East Coast presence for the exchange. Best known for its listing of exchange-traded funds (ETFs), the NSX offers stock quotes, reports trades, and executes trades. Standard trading hours for this exchange extend from 9:30 am to 6:30 pm Eastern Standard Time (EST). The National Stock Exchange operates Monday through Friday.

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