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Lesson 7. The Markets > International Exchanges - Pg. 38

The Markets 38 Since NMS is so large in scope, attempting to report the entirety of even a single day's trading would create a document the size of the New York City phone book. NASDAQ therefore breaks down its listings by relevance, so investors (or anyone else) can search subdivided listings to learn the fate of their stock's performance. The Wall Street Journal, for example, includes these subdivisions: · National Market Issues. --This listing reports on the activity of the most actively traded over- the-counter stocks. As a result, the information is usually the most widely reported and com- prehensive in scope. · NASDAQ Bid and Asked Quotations. --This listing usually covers the second most actively traded set of stocks. The information reported daily is less comprehensive in scope than National Market Issues and is a little less widely reported. · Additional OTC Quotes. --Even though these are the least active of all the reported over-the- counter trades, they are still active enough to merit widespread reporting. Reported information is limited to the highest bid price of a stock and the lowest asking price of the stock for a single day's trading. International Exchanges The scope of American finance is absolutely unparalleled anywhere else on the globe. The American economy is somewhere around 16 times the size of its closest competitor. The sixth largest economy on the face of the earth, for example, is that of the State of California. For all its size, however, the U.S. economy does not, by any stretch of the imagination, stand alone. Exchanges and financial markets all over the world, through the use of today's computerized systems, have created a world where stocks trade 24 hours per day. Exchanges exist in almost every major city in the world, including Paris, London, Frankfurt, Tokyo, Johannesburg, Sidney, Hong Kong, and Singapore. While every one of these exchanges directly affects, and is directly affected by, each other, they are all under the authority of their own govern- ments and must follow their government's laws. As a result, they differ from each as much as they are the same. While learning about international markets is interesting, actually investing in them as an individual is an altogether different matter. As a general rule, most international investing is done by corporate entities such as banks or mutual funds which then provide opportunities for in- ternational investments domestically through the use of ADRs or globally invested funds. Caution Moving money and stock from country to country is a very difficult transaction as a result of conflicting tax structures, exchange rates, and permissible investments. In addition, although the activities of the international exchanges are not as widely reported in the United States as those of our own exchanges, that fact in no way reflects badly on the prestige or importance of these markets. Several of these exchanges, for example, predate the founding of either or both of the major American exchanges. London claims the world's oldest stock exchange, having been founded in 1773. The results of the day's trading in international exchanges are readily available in the United States, though the reports are not as extensive as for the U.S. exchanges. Many financial publications list the results of any day's trades in a number of financial markets. The Wall Street Journal and The New York Times both publish the results of the most actively traded stocks worldwide. Your local paper may track some foreign holdings, too. (This will be discussed in greater detail in Lesson 14, "How to Check Your Investments." )