Over the Table Stock Exchanges

The stock exchanges continue to mainly work as a medium for stock brokers instead of stock salesmen. The commission rates of stock brokers have also increased but they have only gone up nonetheless, around in proportion to that of most kinds of other services. On the other hand, the over the counter markets function on a very different idea. Every day chosen members of the National Association of Securities Dealers provide the newspapers of that area with quotations on the long list of the more active securities of interest that are not listed to stockholders in that area. These are then put together through close contact with the over the counter places that are the most on the go in trading every security. As opposed to those provided by the stock exchanges, these quotations are not the price ranges that transactions occur in. this can’t occur because there is not an actual main clearing place these transactions are reported to. They are instead big and ask type of quotations. These types of quotations are supposed to provide the uppermost price that any of those interested will bid for every one of these shares and the lowest offering price that they can sell them at.

Keeping a close eye on the reported quotations will in most cases always show that the quotations that have been reported on the bid or buy side are very similar with what could be gotten hold of for shares during the time the quotation was furnished. In most cases the sales are normally more elevated than the bid by a quantity that is a few times greater than the equal stock exchange commission for shares that are selling at that equal price. The difference is then calculated to allow the over the counter place to buy at the price of the bid, pay the salesmen their commission for the time they spend in selling the security, and still leave a good profit after permitting for common operating cost.

To the contrary, if a customer, especially if it is a bigger customer, decides to go up to that very financial house with a bid to purchase this stock and where the commission of the salesman is not involved, in most cases he is able to purchase it at the bid price besides just around the equal amount of the stock of the exchange commission.