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Finance

What is the Chicago Stock Exchange?

By K. Kinsella
Updated May 16, 2024
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The Chicago Stock Exchange (CHX) is located in Chicago, Illinois, and is the biggest regional exchange in the United States. Investors can trade securities listed exclusively with the exchange as well as securities listed on other markets. CHX Holdings Inc., a corporation based in Delaware, owns the Chicago Stock Exchange. The CHX is a self-regulatory organization but is registered with the Securities and Exchange Commission (SEC), which oversees its activities.

Chicago brokers began trading during the 1860s, but the Chicago Stock Exchange officially came into being on 21 March 1882. Charles Henrotin served as the exchange's first president and chairman. The CHX merged with exchanges in Cleveland, Ohio; St. Louis, Missouri; and Minneapolis-St.Paul, Minnesota, in 1949 to create the Midwest Stock Exchange. In 1993 it officially changed its name back to the Chicago Stock Exchange. In 2005, the CHX changed its structure and went from being a member owned nonprofit organization to a publicly traded company.

The National Market System (NMS) provides the framework for over-the-counter (OTC) trading in the U.S. Securities must meet specified criteria to be traded on the exchanges, including the CHX, that form the NMS. The system enables the Chicago Stock Exchange and other regional exchanges to display real-time prices of stocks being sold within the exchange as well as the prices being asked for the same stocks on other exchanges.

As of 2010, the Chicago Stock Exchange operated from Monday to Friday every week but was closed for U.S. federal holidays. There were three trading sessions each day: an early session, the regular trading session and the late session. The regular session was timed to operate during the same hours as other major stock markets in the U.S.

U.S.-based brokers and dealers can connect to the CHX using an electronic matching system. The National Best Bid Offer (NBBO) rule requires dealers to find the best prices for customers who place buy orders. The automated matching system receives orders and matches them to stocks selling for the best prices. If bids cannot be matched, then the system rejects the order, and buy orders remain in the system until an appropriate match is found.

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