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An exchange is where the orders of many buyers and sellers meet in one shared order book, under a rulebook the exchange sets. US law defines an exchange by those same two things: it brings together the orders of multiple buyers and sellers and uses established rules for the orders to trade against each other. An exchange has a list of listed products and has members. In the US, an exchange’s members must be registered brokers or dealers, firms that take clients’ orders to the market or trade with their own capital, so individual investors place orders through a broker. An OTC (over-the-counter) market is where products not listed on any exchange trade. The two sides agree between themselves, usually a client with a dealer or dealers with one another, so there is no single place of trading. Prices are not necessarily made public, and each side may have to manage counterparty risk, the risk that the other side fails to meet its obligations. The two groups are not fully separate. In the US, a national securities exchange is an exchange registered with the securities regulator SEC, and a futures exchange (designated contract market, DCM) is designated by the US derivatives regulator CFTC. An alternative trading system (ATS) matches orders like an exchange but is exempt from registering as one. Under SEC rules, a broker or dealer that matches its clients’ orders internally in its own book also counts as a trading venue. Off-exchange trading of listed stocks also differs from the OTC above: the stock is still listed, only the order is filled elsewhere. The diagram below sorts the places where orders are matched the way US law names them.

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Where does each product trade?

Say you buy a US stock, a futures contract, EUR/USD and bitcoin this morning. The four orders go to four kinds of venue, and the price you see on the screen comes from four different sources.
US stocks trade both on and off exchange. On exchange, the SEC lists 29 national securities exchanges as of January 7, 2026, including NYSE, Nasdaq, Cboe’s exchanges and some that trade only options. Off exchange are the dealers that match their clients’ orders themselves and about 35 ATSs that trade stocks, according to the SEC’s list updated March 30, 2026. The article Market participants describes which route your order takes. Unlisted stocks trade OTC, carried out by market makers.How big is the off-exchange part? According to the exchange operator Cboe Global Markets, the US stock market traded an average of 17.6 billion shares a day in 2025, and for the first time the off-exchange share exceeded half.That works out to about 8.9 billion shares a day (17.6 × 50.6%) traded off exchange and 8.7 billion (17.6 × 49.4%) on exchange. The 2025 off-exchange share is 3.61 percentage points above the year before, which puts 2024 at about 47.0%.Trading in so many places, you still see one price. The exchanges and trading centers send their trades and quotes to one place that consolidates them. That consolidated tape produces the NBBO (national best bid and offer): the highest bid and lowest ask being quoted.Two things follow for anyone working with data. Cboe computes 50.6% on the market’s total consolidated volume, so a data set of exchange trades only misses the off-exchange part, about half of the volume. And the single price of a US stock is the NBBO, combined from every venue, not the price in any one exchange’s book.

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What happens after an order trades?

A trade is not the last step. After it, the trade is cleared and settled, meaning the two sides reconcile it and then exchange money and assets. This step is run differently in each market, so a trader needs to know only a few things, and the details are in the documents of the parties that run it:
  • US stocks settle one business day after the trade (T+1): sell a stock on Monday and the money arrives in your account on Tuesday. The details are in the SEC’s guide to the T+1 cycle.
  • Futures have the exchange’s clearing house standing between the two sides, and profit and loss are calculated and paid in cash every day at the settlement price, not when you close the position. CME explains it in two articles, What is Clearing? and Mark-to-Market.
  • Crypto on a centralized exchange has no clearing house. The exchange itself records clients’ balances in its own system, as the report of the international organization of securities regulators, IOSCO notes, so the balance you see on the exchange is a claim on the exchange.

Market participants

Who buys and sells in the market and who you are trading with.

Brokers

What a broker does, how it is paid and where it sends its clients’ orders.
Last modified on October 16, 2026