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Summary
- NYSE was founded in 1792. It has a market cap of US$21.3 trillion. Nasdaq, founded in 1971, has a market cap of US$1.1 trillion.
- NASDAQ’s listing fees range between US$50,000-75000, while NYSE charges US$500,000.
- Nasdaq conducts 40% of its trading electronically, while NYSE handles 7% of its transactions via the Electronic Communication System (ECN).
The New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ) are the two largest stock exchanges worldwide. NYSE is an auction market, while NASDAQ is a dealers’ market.
Difference Between NYSE and Nasdaq
NASDAQ was founded in 1971. It is a dealers’ market where participants buy and sell stocks through dealers and not directly. So, dealers post a sell or purchase price of a specific stock.
Dealers are known as market makers, and they are generally banking institutions or brokerage companies. Market makers connect matching buyers and sellers a lot quicker to ensure an efficient trading process.
On the other hand, NYSE was founded in 1792. It is an auction marketplace where the participants trade between them in an auction, meaning sellers and buyers enter competitive bids simultaneously. As a result, the stock price reflects the highest and lowest value that buyers or sellers want to buy or sell.
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Both NASDAQ and NYSE are in New York City. Participants join physically on the trading floor of the NYSE exchange in New York or New Jersey.
On NASDAQ, which is an electronic exchange, trading does not happen physically. Instead, NASDAQ allows direct trading between investors and dealers.
The traffic controllers of the exchange connect the buyers and sellers. The market makers, or traffic controllers, buy and sell stocks on behalf of investors. Conversely, NYSE traffic controllers set the opening price of stocks for buyers and sellers, accept limit orders and moderate interest for specific stocks.
NASDAQ conducts 40% of its trade through the Electronic Communication System (ECN), which matches buyers and sellers. On the other hand, NYSE operates 7% of its business through ECN and gradually moving towards full adoption of the ECN.
What Type of Companies Trades on NYSE and NASDAQ?
NASDAQ has a market cap of US$11 trillion, while NYSE is US$21.3 trillion. NASDAQ has 3,300 publicly traded companies listed on its platform. NYSE has 2,800 largest publicly traded companies, besides small and mid-cap companies.
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Companies that want to be listed at NASDAQ should have 12,500,00 shares ready for trade. At NYSE, companies should issue a minimum of 1,100,000 shares to at least 400 shareholders. NASDAQ’s listing fees range between US$50,000-75000. NYSE charges US$500,000, and the stock price should be a minimum of US$4, with a total value of the stocks at US$40million.
Companies listed on NASDAQ need to have at least three dealers. NASDAQ has been a publicly traded corporation, while NYSE was private before. It went public in March 2006.
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