Boston Stock Exchange

Learning about the Boston Stock Exchange

The Boston Stock Exchange, called NASDAQ OMX BX, or simply BX, made its debut on January 16, 2009. By the end of the year, it was trading, on average, 250 million shares per day. BX trades securities on regional exchanges in the U.S., including NASDAQ and the New York Stock Exchange. As a registered National Market System (NMS)* protected quote, the best bid and best offer on BX is protected under Rule 611 by Securities and Exchange Commission.

*(The NMS supports free market activities by regulating how stock exchanges disclose and execute trading. This system covers equity trading or order fulfillment in the United States – a system that manages trades, clearances, depositories, and quote distribution activities.)

With regards to order types and function, the Boston Stock Exchange offers orders to add or remove liquidity from the BX book. Moreover, Intermarket Sweep Orders or ISOs and pegging functions are supported by the Boston Stock Exchange, as are attributable and non-attributable orders.

The Boston Stock exchange also offers a post-only order type, which assists market participants to anticipate trading costs by increasing their ability to control their provision of market liquidity. With the launch of BX, NASDAQ OMX introduced BX TotalView, a proprietary data feed that provides order level data with market participant attribution, including many user-friendly features.

While it is not necessary for firms to be FINRA or NASDAQ members to become a Boston Stock Exchange member, a BX applicant must be a member of at least one other self-regulatory organization (SRO) when applying for a BX membership.

Firms that were members of the Boston Stock Exchange at the time of the changeover have not automatically become members of NASDAQ OMX BX, but have had to register as members of the Boston Stock Exchange and sign a NASDAQ OMX BX membership agreement. A non-refundable fee of $2,000 applies to all applications.

In addition to acquiring membership interests in BSE, NASDAQ OMX acquired the Boston Options Exchange Regulation (BOXR) and the BSE Clearing Corporation (BSECC), both of which are wholly-owned subsidiaries of BSE. However, NASDAQ did not acquire an interest in BSE’s options trading facility, the Boston Options Exchange (BOX). There will continue to be a connection of sorts though, as the Boston Stock Exchange operates as the regulatory services provider to BOX through BOXR.

Interestingly, Boston maintains the oldest, continuously used port in the U.S., employing it to export metals and grains, and using it for the importation of autos and petroleum products. The port is capable of accommodating some of the largest ocean-going freighters in the world, making it strategically important for trade and adding to Boston’s commercial stability.

Therefore, it just makes sense that the city would also be a place that features a stock exchange. That is why the Boston Stock Exchange has been an important trading forum to Bostonians as well as U.S. and international investors.

How It All Started

The Boston Stock Exchange was the last and the oldest of regional U.S. stock exchanges. Located in the historic district of Boston the exchange was established in 1834 – a time when gas-lit streets and red brick buildings gave the exchange its distinction and influence.

Becoming a Part of NASDAQ

The Boston Stock Exchange operated independently until NASDAQ bought it for $61 million in 2007. Its regular hours of operation were from 8:00 a.m. to 7:00 p.m. during the week, except for holidays. The exchange formerly owned 2 subsidiaries, as mentioned: the Boston Options Regulation and BSE Clearing Corporation.

In 2002, the Boston Exchange was the co-founder of BOX (Boston Options Exchange) with the Montreal Exchange ( derivatives exchange), and the discount broker, Interactive Brokers. Five years later, the Montreal Exchange acquired all the remaining controlling interests.

What Distinguishes the Exchange in History

When it was in its prime, the Boston Stock Exchange was known for its admittance for membership of foreign brokers. This made the exchange a kind of trailblazer in the international financial sphere – something that allowed capitalism to mature all over the world. The exchange also separated from the ranks of its bigger rival, The NYSE, by permitting the exchange of bonds for cash in 1914. This activity led to the beginning of the First World War.

While most of the following companies are either defunct or have merged, they were prominent players, at one time, on the Boston Stock Exchange:

• Cleveland Biolabs, Inc.

• First Carolina Investors, Inc.

• Bluefly Incorporated

• American Mold Guard

• Timeline, Inc.

• Magelian Petroleum Corporation

• Ascent Solar Technologies, Inc.

As you can see, the Boston Stock Exchange has a rich and diverse history – one that makes it a leader in a traditional sense. To further your adventure, a visit to the exchange is in order.

See the Exchange’s First Building

Begin your fiscal trip by visiting the site of the traditional 12-story Boston Stock Market building, which was erected in 1891 at the corner of Congress and Slate streets. A signature glass tower was built in 1984, and lends to the building’s popularity as a tourist attraction.

Visiting 100 Franklin Street

The current Boston Stock Market building, housing the Boston Stock Exchange, is located at 100 Franklin Street. The Beaux-Arts style building comprises 10 floors. When entering the building, you can see all the activity of the Boston Stock Exchange behind a glass-contained area over the trading floor.

The Boston Stock Exchange, currently a NASDAQ conglomerate member, features multi-media displays that allow investors and others to see how the economy evolved in the northeastern U.S.

You only need to view the electronic ticker tapes to see how the Boston Stock Exchange influences the economic activities of U.S. and international investors. The exchange regularly displays 2,000 listed equities in the U.S. and 200 high-growth company issues on its trading floor. When you see things working in this way, you can appreciate the practice of trading even more.

What about you? What do you think of regional exchanges, such as the Boston Stock Exchange? How do you think trading has changed since it was introduced in the early part of the 1800s? What do you think sparked the activity? In most cases, it was the need to raise capital that caused early and later exchanges to flourish. Therefore, paying a visit to an exchange, especially the Boston Stock Exchange, should be included on any investor’s bucket list.

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