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Stock typically is purchased and sold on stock exchanges — markets for buying and selling stocks and other financial instruments. Major stock exchanges in the United States (US) include the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ). Although these two exchanges are the country’s largest and most powerful exchanges, they are not the only ones engaged in the buying and selling of securities. The Pacific Stock Exchange was one of several smaller, regional exchanges and was absorbed into the NYSE in 2007 via acquisition.
In 1957, the San Francisco Stock and Bond Exchange merged with the Los Angeles Oil Exchange to form the Pacific Stock Exchange. The main office and trading floor was located in San Francisco and a satellite trading floor was operated in Los Angeles. Although smaller than the NYSE and NASDAQ, the Pacific Stock Exchange was a market where stocks and bonds were bought and sold. In the mid-1970s, it began trading the put and call option contract — option is a contract that gives the investor the choice to buy or sell stock and other financial assets at a particular price up until a certain time in the future.
During the final three decades of the 20th century, the Pacific Stock Exchange traded more than 1,200 stock options and also became one of the world’s leading derivatives markets. In 1997, the word "Stock" was dropped from its name and it became known simply as the Pacific Exchange. Stock exchanges are private organizations own mutually by a limited number of members — usually stock brokerage and investment houses. In 1999, the Pacific Exchange became the first US stock exchange to demutualize.
At the turn of the century, most financial transactions were being handled by computer — dealers and brokers no longer needed to do business face-to-face. As a result, the Pacific Exchange closed its Los Angeles trading floor in 2001; one year later, it did the same in San Francisco. In 2003, it developed an electronic options trading system. Then in 2005, the Pacific Exchange was acquired by Archipelago Holdings. One year later, it was purchased by the NYSE, essentially ending its run as a separate company.