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Organized and over-the-counter securities exchanges are similar in that they both deal with the trading of securities such as stocks and bonds However they are different in many ways An organized securities exchange is defined as A securities marketplace where purchasers and sellers regularly gather to trade securities according to the formal rules adopted by the exchangewwwtrading-glossarycom On the other hand a security is traded over-the-counter OTC if it trades in some context other than a organized exchange The New York Stock Exchange and the Nasdaq stock market are two examples of organized securities exchanges In an organized market trading is done in various ways it may occur on a continuous auction basis it may involve brokers buying from and selling to dealers in certain types of stock or it may be conducted through specialists in a particular stock Some stock exchanges such as the New York Stock exchange NYSE sell seats the right to trade to a limited number of members who must meet eligibility requirements Stocks must likewise meet and maintain certain requirements or risk being delisted Stock exchanges differ from country to country in eligibility requirements and in the degree to which the government participates in their management The London Stock Exchange for example is an independent institution free from government regulation In Europe members of the exchanges are often appointed by government officials and have semi governmental status In the US stock exchanges are not directly run by the government but are regulated by law Technological developments have greatly influenced the nature of trading In a traditional full-service brokerage a customer placed an order with a broker or member of a stock exchange who in turn passed it on to a specialist on the floor of the exchange who then finished the transaction Increased access to the Internet and the increase of electronic communications networks ECNs changed the investment world Through e-trading the customer enters an order directly on-line and software
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