Difference Between NYSE and NASDAQ

Introduction

This article comparing the differences between NYSE and NASDAQ would assist in enlightening the audience on the various traits, operational variances, and strategic considerations of these two famous stock exchanges. At last, some FAQs will be mentioned. Typically, the New York Stock Exchange (NYSE) or Nasdaq springs to mind when a person discusses the stock market. One must refrain from arguing with the reasons. Combined, these two exchanges handle most of the stock trading both domestically and abroad. The ways that the Nasdaq and the NYSE conduct business and list different kinds of stocks. Understanding these distinctions will enable you to grasp the workings of a stock market and the procedures involved in purchasing and selling stocks more fully.

While the NASDAQ conducts more transactions every day, the NYSE has a significantly larger market capitalization than the NASDAQ. They also trade in a variety of ways. While NASDAQ is an electronic market, NYSE utilizes a hybrid trading methodology that combines technology and humans. While NYSE continues to operate a Wall Street trading floor, the bulk of transactions are conducted in its Mahwah, New Jersey, data center. Comparing NASDAQ and NYSE gives one an idea of the various market types. Dealer markets are those of the NASDAQ; auction markets are those of the NYSE. At an auction, the lowest asking price and the highest offer for a stock match. Dealer markets allow for computerized dealer-to-dealer purchases and sales in a matter of seconds. The NYSE has one Designated Market Maker (DMM) per stock, who guarantees an equitable and efficient market for that asset. Meanwhile, a stock on the NASDAQ has an average of 14 market makers.

NYSE

The New York Stock Exchange (NYSE, also referred to as "The Big Board") is located in Lower Manhattan's Financial Zone in New York City. In terms of market capitalization, it is the world's largest stock exchange. A National Historic Landmark, the NYSE trading platform is housed in the New York Stock Exchange Building at 11 Wall Street and 18 Broad Street. In February 2007, a former trading room located at 30 Broad Street was closed. Intercontinental Exchange (NYSE: ICE) is an American retained corporation that also floats on the NYSE. It was once a component of NYSE Euronext (NYX), which was created when NYSE and Euronext merged in 2007. A Gallup survey taken in 2022 found that almost 58% of American people had stock market investments, whether they were in mutual funds, specific equities, or retirement plans.

The NYSE represents the finest of capitalism, the conviction that everyone has the opportunity to profit from achievement in free and fair markets. Our unmatched trading platform sets the benchmark and helps investors, businessmen, and inventors obtain the money they need to transform the world. We require that we promote the accountable growth of international business by sharing with our mentioned community our goals for good governance, openness, and trust. It would help if you had put forth more effort to list elsewhere.

NASDAQ

Aiming to establish an electronic stock market, the National Association of Securities Details founded the Nasdaq in 1971. For example, it was challenging to start because the Nasdaq could only provide automatic quotes at first. Established in 1971, it was the pioneer of the electronic stock market. Since then, it's gained recognition for its technologically driven advertisements, with a large number of IT giants like Apple, Microsoft, and Amazon trading there. Comprising over 2,500 listed businesses, the NASDAQ Composite Index is one of the most monitored stock market indices in the world and measures both the US and international economies.

The 100 biggest non-financial firms listed on the NASDAQ-including Apple, Dollar Tree, Keurig, Sirius XM Holdings, and Zoom Video Communications-are tracked by the NASDAQ 100, a large-cap growth index. With roots in the National Association of Securities Dealers (NASD), the NASDAQ was established in 1971. Being the first automated stock exchange around the globe, it has developed into a significant participant in the international financial markets. Officially separating from the NASD, the NASDAQ started functioning as a national securities exchange in 2006. When it merged with the Scandinavian exchange firm OMX in 2008, it became the Nasdaq OMX firm, and in 2015, it changed its acronym to NASDAQ Inc. With more than 5,000 listed businesses and a market value of more than $23 trillion, the NASDAQ is now a major participant in the international financial markets. Its services are still being expanded and innovated upon, with new trading technology being developed and business activities being integrated with other financial markets.

Differences

For traders, investors, and companies alike, knowing the distinctions between the NYSE and NASDAQ is important. Investors must be aware of the distinctions between the NASDAQ and NYSE.

It helps you choose the appropriate exchange based on your investment preferences. It helps in making decisions between growth-oriented and stable stocks. It enables well-informed investing strategies by providing information on the operating models and types of listed firms.

Difference According to Investors

1. Investors Seeking Stability as Opposed to Growth

NYSE

The New York Stock Exchange (NYSE) is a popular choice among investors seeking stability due to its numerous blue chips and reputable companies known for their consistent performance and dividends. This exchange attracts more cautious investors who prioritize reduced risk and consistent returns. Because of its stringent listing rules and historical renown, it is a preferred option for those who are interested in making investments that are stable over the long term.

NASDAQ

NASDAQ, which is well-known for its concentration on technology and creative firms, is often preferred by investors who are looking for growth. Anyone who has a higher risk tolerance and prioritizes rapid revenue and profitability development is likely to be interested in this exchange. Investors who are looking for exciting market prospects and large capital appreciation are likely to be interested in this market because of its more flexible listing standards, which allow for the participation of smaller entities with enormous potential.

2. Risk Tolerance

NYSE

Conservative investors with a lesser risk tolerance, like the NYSE for its steady, well-established corporations. The exchange's high listing rules assure stability, making it perfect for individuals seeking stable returns and lower volatility.

NASDAQ

Investors with greater risk tolerance favor NASDAQ, lured by its creative, high-growth enterprises. The exchange's flexibility attracts new IT enterprises, offering the potential for big rewards but with increased instability, enticing those tolerant of larger market shifts.

3. Investment Strategy

NYSE

Value investors frequently choose the NYSE, concentrating on cheap businesses with excellent fundamentals and reliable profits. The exchange's listing of blue-chip businesses across numerous industries gives prospects for consistent, long-term investments. Its longstanding reputation and high standards attract investors seeking predictable dividends, steady growth, and reduced risk, making it a good fit for conservative, long-term investing plans.

NASDAQ

Growth investors like NASDAQ because of its creative, high-potential companies. The exchange's concentration on technology and developing industries corresponds with strategies targeting quick revenue and profit increases, appealing to investors striving for big returns despite increased uncertainty and risk.

4. Company Type Preference

NYSE

Investors favoring the NYSE are often attracted to large-cap, well-established corporations across conventional industries, including banking, consumer goods, and industrials. The exchange's severe listing procedures guarantee these firms have solid financial records and reliable functioning. It attracts investors seeking reliable investments in blue-chip firms known for steady growth, stable dividends, and long-term stability.

NASDAQ

Investors choosing NASDAQ frequently want exposure to dynamic and inventive areas such as technology, biotechnology, and rising-growth industries. The exchange's listing guidelines aim at smaller and mid-cap firms with significant development potential and innovative goods or services. It caters to investors interested in capitalizing on quick sales and profitability development, prepared to endure more volatility in exchange for possible big gains.

5. Prestige and Historical Performance

NYSE

In the realm of finance, the NYSE has an established track record of grandeur and steadiness. As the world's biggest stock exchange by market capitalization, it lists numerous renowned blue-chip corporations with significant past performance. Investors admire its history of steady dividends, excellent corporate governance, and major impact on global finance. Its prominent position attracts investors of all types seeking dependable, long-term investment options.

NASDAQ

NASDAQ is famous for its inventive spirit and historical importance in the technology industry. It was initially known for listing computer heavyweights like Microsoft and Apple, but it continues to bring in cutting-edge enterprises and high-growth startups. While younger than the NYSE, the NASDAQ's importance in developing contemporary markets and index performance, particularly the NASDAQ Composite and NASDAQ-100, highlights its reputation among investors seeking development and technical innovation.

6. Market Perception

NYSE

The NYSE is viewed as a stronghold of stability and trustworthiness in the financial world. Its concentration on proven blue-chip corporations and strict listing procedures instill trust among investors seeking solid, long-term investments. The exchange's conventional trading floor and appointed market makers further cement its reputation for orderly and transparent trading operations, which is intriguing to conservative market players.

NASDAQ

NASDAQ is recognized as a vibrant and inventive market linked with high-growth prospects in technology and biotechnology areas. Its computerized trading platform and concentration on developing firms attract investors seeking quick capital gains and technical progress. While considered more volatile, NASDAQ's index performance and pioneering position in computerized trading emphasize its attraction to risk-tolerant investors.

7. Firm Size and Financial Strength

NYSE

The NYSE is home to many of the world's biggest and most financially strong corporations, frequently distinguished by huge market capitalizations and broad worldwide operations. Investors admire its high listing standards, which ensure that listed businesses display excellent financial health and stability, making it a popular exchange for investors looking to invest in large-cap, industry-leading organizations.

NASDAQ

NASDAQ provides a varied spectrum of enterprises, including smaller and mid-cap corporations, with high growth prospects and creative skills. While not as dominating in size as NYSE-listed giants, NASDAQ-listed businesses typically display substantial financial strength and agility, appealing to investors interested in developing technologies, biotechnology, and other exciting sectors set for rapid expansion and market disruption.

8. Investment Horizon

NYSE

Investors on the NYSE often have a longer investment horizon, choosing reliable, blue-chip firms with regular profits and dividends. The exchange's focus on established enterprises and trustworthy performance matches well with plans aimed at attaining sustainable development over the long term, especially for patient, conservative investors.

NASDAQ

Investors in NASDAQ frequently have a shorter investing horizon, spurred by possibilities in fast-growing areas like technology and biotechnology. The exchange's concentration on innovative and high-growth firms attracts individuals seeking quick capital appreciation and the willingness to endure more volatility for the chance of big gains in a shorter period.

9. Trading Style

NYSE

The NYSE allows for a classic trading style, combining computerized trading with physical floor trading. Designated market makers (DMMs) guarantee liquidity and support orderly trades. This structure appeals to investors looking for a structured and transparent market environment with options for price identification and human monitoring.

NASDAQ

NASDAQ allows a dynamic and competitive trading style exclusively via electronic communication networks (ECNs). Multiple market makers compete to offer liquidity and implement deals efficiently. This structure caters to investors and traders wanting fast-paced, technology-driven exchanges with real-time pricing transparency and quick implementation speeds.

Understanding the trading method, which is dealer-based for NASDAQ and auction-based for NYSE, may help investors better understand how bids are placed and pricing is set, which can influence their trading plans.

10. Listing Criteria

Knowing the listing criteria of each exchange can help companies select the best venue for going public, depending on their scale, financial situation, and strategy.

NYSE

The New York Stock Exchange (NYSE) and NASDAQ have stringent listing requirements to ensure that listed firms are financially sound and adhere to high corporate governance standards. For the NYSE, corporations must meet financial standards, such as having cumulative pre-tax profits of at least $10 million over the past three fiscal years and a minimum profit of $2 million in each of the two most recent fiscal years. They must also have a global market capitalization of at least $200 million or sales of at least $75 million if they still need to achieve the profit criterion.

Furthermore, NYSE-listed firms require at least 400 shareholders owning 100 or more shares each, at least 1.1 million publicly owned shares, and a minimum share price of $4 at the moment of listing. Corporate governance principles include having a significant number of unbiased directors on the board, an auditing committee, annual shareholder meetings, and a stated code of behavior for directors, executives, and workers.

NASDAQ

For NASDAQ, which has three market levels, the NASDAQ Global Select Market has the highest specifications. The financial standards comprise aggregate pre-tax profits of at least $11 million over the prior three fiscal years or other criteria that include market capitalization of at least $550 million with cash flow of $27.5 million or $850 million in market valuation with $90 million in sales.

Companies must also fulfill additional standards, such as having at least 450 round lot owners, 1.25 million publicly traded shares, no fewer than three market makers, and a minimum bid price of $4 per share. Corporate governance norms are comparable to those of the NYSE, including an overwhelming number of independent directors, an independent audit committee, annual shareholder meetings, and a declared code of conduct. These tough criteria guarantee that firms listed on the NYSE and NASDAQ are dependable and governed effectively, bringing security to investors.

Key Milestones

NASDAQ

• 1985
  The Nasdaq-100 Index was introduced in 1985. It tracks the performance of the 100 biggest non-financial businesses listed on the market. This index has evolved into a benchmark for technology and growth companies.
• 1998
  Nasdaq-Amex Market Group was created when it combined with the American Stock Exchange (AMEX). This combination sought to improve the exchanges' competitive posture.
• 2000
  Nasdaq transformed from a securities dealer organization into a for-profit business when it became public in 2000.
• 2007
  Nasdaq OMX Group was formed when it bought OMX, a leading exchange provider in the Nordic and Baltic areas. This combination broadened Nasdaq's technology capacity and worldwide presence.
• 2013
  Pondering its wide range of market services and technology solutions, Nasdaq OMX was renamed Nasdaq, Inc. in 2013.

NYSE

• 1865
  To handle the growing trading volume, the exchange relocated to 11 Wall Street, New York City.
• 1903
  Opening in 1903, the famous NYSE structure had a neoclassical style and a large trading floor area. This structure still represents the NYSE's position in the financial industry.
• 1929
  The Wall Street Crash, a momentous event in NYSE history, brought about the Great Depression. The catastrophe made clear how urgently rules must be changed to guarantee the stability of the market.
• 1971
  : The NYSE modernized its operations and governance when it changed from a privately held business to a not-for-profit corporation.
• 2006
  : The NYSE changed its structure and merged with Archipelago Holdings to become NYSE Group, Inc., a publicly listed corporation. This union signaled the start of a string of calculated expansions.
• 2007
  NYSE Euronext, the first worldwide stock exchange, came about through a merger with pan-European exchange Euronext.
• 2013
  Intercontinental Exchange (ICE) bought NYSE Euronext, therefore unifying worldwide trading systems and improving technical capacity.

Conclusion

All things considered, knowing the distinctions between the NYSE and NASDAQ is crucial to making wise investing choices, choosing the best exchange to list stocks on, and maximizing trading tactics. It helps market players efficiently negotiate the financial markets and take advantage of opportunities while reducing risks.

FAQs

Q.1. NASDAQ is owned by whom?

Ans: The NASDAQ, the second-largest stock exchange worldwide by market capitalization, is a US-based stock market platform. NASDAQ Inc., the parent company of the NASDAQ stock exchange, owns and operates the National Association of Security Dealers Computerised Quotations.

Q.2. What is higher than the NASDAQ?

Ans: The two largest stock exchanges in the world are the NASDAQ and the NYSE, both of which are located in New York City. Greater in market capitalization than the NASDAQ, which is renowned for its broad range of tech-related firms (such as Google and Facebook), is the New York Stock Exchange (NYSE).

Q.3. NYSE is owned by whom?

Ans: Nowadays, Intercontinental Exchange owns NYSE, NYSE MKT, and NYSE Amex Choices. Intercontinental Exchange (NYSE: ICE) runs the largest array of clearinghouses and regulated exchanges.

Q.5. Which is bigger, the NASDAQ or the NYSE?

Ans: The two biggest stock exchanges in the world, NASDAQ and NYSE, are both situated in New York City. Larger in market capitalization than the NASDAQ, which is renowned for its broad range of technology firms (such as Google and Facebook), is the New York Stock Exchange (NYSE).

Q.6. How can TradingView show me the NASDAQ?

Ans: You must establish an account, execute the steps set out by your broker, and then begin trading to achieve this. You can trade NASDAQ, Inc. stock directly from TradingView graphs; choose your broker and log into your account.

Q.7. What is the forecast for NASDAQ?

Ans: The target price for NASDAQ is $68.18 on average. The basis for this is the 12-month price estimates published in the last three months by 13 Wall Street experts. Analyst price targets range from $54.00 to $80.00. The average price forecast is 12.97% higher than the current cost of $60.35.

Q.8. What drives NYSE listings?

Ans: A quote listing offers currency for U.S. purchase agreements, liquidity for U.S. investors owning the shares before they are listed, and the possibility to raise funds in the U.S. open markets.

Q.9. Why switch to the NASDAQ from the NYSE?

Ans: Making the NASDAQ switch benefits your stock. After moving to NASDAQ, stocks' intraday volatility spreads, liquidity, and closing strengthened.

By July 2023, the two biggest stock exchange operators in the US, the NASDAQ and the New York Stock Exchange (NYSE), collectively had a market capitalization of over 47 trillion US dollars for domestically listed businesses. At the time, the two economies were not quite equal in size; they were around 25 and 22 trillion U.S. dollars, respectively.