NYSE vs NASDAQ: How Do These Exchanges Stack Up Against Each Other?

NYSE stands for New York Stock Exchange whereas NASDAQ stands for National Association of Securities Dealers Automated Quotations. They are the two largest stock markets in the United States of America (and the world), capable of influencing global markets and affecting GDPs across the globe. The two entities participate in a kind of competition, they are considered for all purposes, rivals. However, they are characterized by even profound differences. Below is a complete overview of the differences, as well as precise information on how they work.

NYSE vs NASDAQ: Clash of the Titans

NYSE vs NASDAQ: Fierce Competition

Currently, the first place in the ranking belongs to the NASDAQ. It is credited with bringing a digital revolution to the stock market, at least in the United States. This has led many technology companies, such as Facebook , to choose it for their quotes, especially in the IPO phase (that is, when a stock makes its debut on the market).

Recently, and Mark Zuckerberg’s network is a shining example, the NASDAQ has made some slip-ups. The NYSE has therefore been able to regain ground, draining a significant number of players in the high-tech sector of its rival. However, NASDAQ still holds the record. In this regard, it should be noted that the NYSE is much older, since it was founded in the very distant 1792 . The NASDAQ was born almost two centuries later (1971), the first market in the world to accept exchanges exclusively by electronic means; however, in the stock market, past experience clearly counts for little. In fact, if the NASDAQ ranks first in terms of market share and volume traded, the NYSE outperforms it by capitalization. This last criterion, however, when thinking about the size of a market, NASDAQ comes second.

NYSE vs NASDAQ: the substantial difference

In addition to the numbers, what divides the NASDAQ and the NYSE is the substance, the principle of operation. It just translates differently. The first is primarily a “dealer”, the second is an auction market.

The dealer is for all intents and purposes a financial intermediary that uses resources to create a portfolio of securities. In essence, the trafficker is positioned midway between investors and banks. Specifically, it buys a security at a “money price” and sells it at a “letter price”, generally higher than the previous one. The value of the security is not determined by the clash between supply and demand, but by the trader. In the collective imagination, the merchant is a speculator, but in reality he performs a necessary function: he favors the exchange of values, facilitates the encounter between those who buy and those who sell.

The operation of the auction market , on the other hand, is much more intuitive and follows the dynamics already known to ordinary people. Whoever offers the most wins, simply put. From this principle was born the famous image of the merchant shouting buy or sell orders in a chaotic climate. This image, it must be said, belongs to the past. Not least because even the NYSE is managed through a telematic auction: trading orders are executed electronically, through the many possibilities offered by digital technology.

The NYSE is a particular market because it is a “continuous auction” market. This implies that on the NYSE, commercial proposals are not delivered in a specific and limited time interval, but on a constant basis, throughout the opening hours of the exchanges. The NYSE, despite its age, is an incredibly dynamic market, somewhat volatile as the price updates over and over again over the course of a day. Furthermore, it is a two-way market: prices are offered by both buyers and sellers. This feature also helps reinforce the element of volatility.

Another important difference between the NASDAQ and the NYSE is the requirement to participate in the exchanges. To be part of the NYSE, for example, companies must issue at least 1,100,000 shares and have 400 or more shareholders. The NASDAQ is more demanding: the shares must be at least 1,250,000. The shares must be priced at $4 or more. This makes the NASDAQ a market reserved for the most important, wealthy and respected companies.

NYSE vs NASDAQ: Who is listed?

In reality, the catchment area is not only characterized by economic power. Over the years, as already mentioned at the beginning of the article, the two markets have specialized in different categories, which not only have to do with mere economic issues. The NYSE mainly features historical brands, with a lot of history behind them, such as Walmart, Coca Cola, Citigroup. In contrast, the NASDAQ lists most of the leading technology companies: Facebook, Amazon, Google. Just to provide some numerical coordinates, it should be specified that the companies listed on NYSE are 1,860 while those listed on the NASDAQ are 2,900.

NYSE vs NASDAQ: Indices

The NASDAQ indices are as follows.

NASDAQ Composite

To be admitted to this index, the issuer must first adhere to NASDAQ. You must also have one of the following security profiles:

  • American Depository Receipts (ADR)
  • Common actions
  • Limited partnership interests
  • Ordinary shares
  • Real Estate Investment Trusts (REITs)
  • Economic Interest Shares (SBI)
  • Stock tracking

Closed funds, Etf, derivatives are not included.

NASDAQ 100

This index represents the elite of publicly traded companies. It can be considered as a kind of top 100. Among the most prestigious names are Apple, Cisco, Facebook, eBay, Intel, Microsoft, and so on.

NASDAQ Biotechnology Index

The index is dedicated to biotech companies.

The NYSE has a separate index and four different sub-indices. There is a sub-index dedicated to industrial companies, one for transportation companies, one for utility companies, and one for financial companies. Since 2002, the indices have been calculated by Dow Jones & Company. However, they were created almost forty years earlier, in 1966 to be precise.

NASDAQ and NYSE are two rival markets, but they have actually specialized over time. Therefore, depending on the characteristics of your company, both must be taken into account. 

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