What are the differences between NYSE and NASDAQ? When we talk about the stock market, we usually encounter the terms NYSE or NASDAQ. It is because they are the two biggest stock exchanges in the world. Both of them are excellent platforms if you want to participate in securities trading. At first glance, these two platforms look similar; however, there are significant differences between them. We will find out about the differences between NYSE and NASDAQ in the following.
What are the Differences between NYSE and NASDAQ?
Location
The first difference we are going to talk about is their location. Both of these exchanges are in New York City. However, the location of their transactions differs from each other. When we say the location of the transaction, we do not refer to the street address; it is the place where they transact orders.
- NYSE carries its transactions in physical trading floor on Wall Street in New York City, while the data center of transactions is in Mawah, New Jersey.
- NASDAQ is electronic exchange which means it does not have physical trading floor. The operations take place via direct trading between investors and market makers.
Auction Market vs Dealer Market
In this step, we will compare how buyers and sellers trade securities in the exchanges. NYSE operates as an auction market.
Trades are executed on the NYSE and other stock exchanges by matching bids offered by buyers and sellers. The highest offer, or the amount a buyer is willing to pay, is matched with the seller’s lowest asking price.
On the other hand, trades on Nasdaq are conducted through a dealer rather than directly between the buyer and seller. The dealer, also known as a market maker, facilitates exchanges between buyers and sellers. The dealer is a computer, and all deals at Nasdaq are performed electronically in fractions of seconds.
Size and Number of Listings
There are more than 2,400 companies that combine for $21.3 trillion in market capitalization in NYSE. Moreover, several giant “blue chip” companies such as Exxon Mobil, The Procter & Gamble Company, 3M Company, Johnson & Johnson are listed in this exchange. One of the reasons behind this is the company started its operations back in 1792.
Meanwhile, NASDAQ has more companies than NYSE but has a broader range of company sizes. Even if NASDAQ is well-known for having huge companies such as Facebook, Amazon, and Google, it also has a large number of small listings. NASDAQ, the 46-year-old exchange, has about 1,200 smaller securities with a market capitalization of around $200 million or less.
The Nasdaq has almost 3,800 companies listed, with a total market capitalization of $11 trillion.
Listing Requirements
The exchanges have very different listing requirements. For instance, NASDAQ does not include the company in its listings if it does not own at least 1,250,000 shares available for the public to trade. Meanwhile, the NYSE list companies that issue at least 400 to 1,100,000 shareholders. The next big difference is fees; The entry fee for NYSE reaches up to $500,000. Meanwhile, companies pay from $50,000 to $75,000, with a yearly payment of around $27,000 to enter NASDAQ listings.
Private vs Public
Today, the ownership structure of exchanges differs from what it used to be in the past. Initially, NASDAQ was a publicly-traded company, and the NYSE was private. However, it changed in the March of 2006. The NYSE went public, and traders could trade its shares on an exchange. Traders can use the Nasdaq and NYSE platforms to invest in Nasdaq and NYSE stocks.
Which Exchange is Better for You?
Volatility: If you wish to invest in stocks with the potential for quick price swings, the NASDAQ will be a good choice. If you want to invest in more stable stocks, the NYSE stocks are a better choice.
Trading style: Unlike the NYSE, the NASDAQ does not have the option of using floor brokers. It only trades electronically. However, both the NASDAQ and the NYSE provide items exchanged through third parties. So there are distinctions between the NYSE and NASDAQ, two of the world’s largest stock exchanges. Both of these transactions share and vary in some ways. You can choose stocks based on the variations across stock exchanges.
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