The NASDAQ and the New York Stock Exchange (NYSE) constitute the two primary securities markets in New York City and the United States. Located in Times Square and the downtown financial district respectively, both of these markets handle a huge volume of daily trading. A number of things differentiate the NASDAQ from the New York Stock Exchange, including the types of securities each handles and the manner in which people conduct trade on the markets.
The Fundamental Difference
The fundamental difference between the NASDAQ and NYSE lies in the method in which each does business. The NYSE constitutes an auction-style securities market in which brokers purchase stocks on behalf of firms or clients. Purchasing at the NYSE takes place in person on the floor of the exchange itself. The NASDAQ constitutes a dealer-based securities market. Dealers sell stocks directly to investors or firms through over the telephone or, more commonly, via the Internet. Trading on the NASDAQ takes place electronically, unlike NYSE trading, which takes in person.
The NYSE places steep restrictions on companies it allows to publicly trade stocks through the exchange. Generally, NYSE-traded companies must possess at least 2200 shareholders, trade 100,000 shares monthly, possess a market capitalization (share value multiplied by outstanding number of share) of $100 million and generate $75 million in revenue annually as of the time of publication. The NASDAQ began as an alternative to the NYSE; it is a market on which companies too small to meet stock exchange qualifications can publicly trade stock.
Evolution of the NASDAQ
In the early days of the technology boom, the NASDAQ handled stock for companies such as Microsoft, which in its infancy proved too small to trade through the NYSE. Many more tech companies now worth hundreds of millions, if not billions, of dollars, did business through the NASDAQ in their early years and stayed with NASDAQ through exponential growth, despite meeting qualifications for the NYSE. Because of the large number of technology firms traded on the NASDAQ, many think of the market as the primary tech market and primary indicator for trends in the technology industry.
NASDAQ vs. NYSE
NYSE first opened its doors in 1792, while the NASDAQ got its start 179 years later, in 1971. According to data published by "Forbes," a finance and investment magazine, the overall value of shares on the NYSE far eclipses that of the NASDAQ. The same holds true for the average dollar amount raised by companies publicly listed on the NYSE versus those listed on the NASDAQ. Despite these trends, according to Forbes’ analysis of this data, the average company that lists on the NASDAQ performs better than the average company that lists on the NYSE, as of the time of publication.
- “Share Investing for Dummies”; James Dunn; 2011
- “Socially Responsible Investing for Dummies”; Ann C. Logue; 2008
- "Forbes"; NASDAQ vs. NYSE: Who’s Really Winning in 2011?; Nicole Perlroth; 2011
- “A Model of the Components of the Bid-Ask Spread”; Alexey Sergeevich Serednyakov; 2006
- “Institutional Investment Management Equity and Bond Portfolio Strategies”; Frank J. Fabozzi; 2009
- World Federation of Exchanges. "Statistics Portal." Registration Required. Accessed Oct. 10, 2020.
- Nasdaq. "Nasdaq National Market Execution System," page 1. Accessed Oct. 10, 2020.
- New York Stock Exchange. "NYSE open and closing auctions," pages 1-2. Accessed Oct. 10, 2020.
- New York Stock Exchange. "The NYSE Market Model." Accessed Oct. 10, 2020.
- New York Stock Exchange. "Designated Market Makers," Page 1. Accessed Oct. 10, 2020.
- Nasdaq. "Initial Listing Guide," Pages 6, 13-14. Accessed Oct. 10, 2020.
- New York Stock Exchange. "902.03 Fees for Listed Equity Securities." Accessed Oct. 10, 2020.
- Nasdaq. "Investor FAQs." Accessed Oct. 10, 2020.
- NYSE Group. "New York Stock Exchange/Archipelago Holdings Merger Complete." Accessed Oct. 10, 2020.
- Nasdaq. "2019 10-K," page 2. Accessed Oct. 10, 2020.
- U.S. Securities and Exchange Commission. "SEC Gives Regulatory Approval for NASD and NYSE Consolidation." Accessed Oct. 10, 2020.
- Library of Congress. "Wall Street and the Stock Exchanges: Historical Resources." Accessed Oct. 10, 2020.
- NYSE Group. "NYSE Group and Euronext N.V. Agree to a Merger of Equals; Combination Will Create The First Global Exchange." Accessed Oct. 10, 2020.
- Intercontinental Exchange Group. "Intercontinental Exchange Completes Acquisition of NYSE Euronext." Accessed Oct. 10, 2020.
Will Gish slipped into itinerancy and writing in 2005. His work can be found on various websites. He is the primary entertainment writer for "College Gentleman" magazine and contributes content to various other music and film websites. Gish has a Bachelor of Arts in art history from University of Massachusetts, Amherst.