Difference Between NASDAQ and NYSE
NASDAQ stands for National Association of Securities Dealers Automated Quotations exchange which is the exchange which allows investors to buy as well as sell the stock and also provides key index that indicates the performance of the stock market whereas NYSE stands for New York Stock Exchange which is the stock exchange located at New York and it is the world’s largest stock exchange on the basis of listed securities total market capitalization.
Whenever we talk about stock markets in North America or around the world, the two major giants come to our mind – NASDAQ and NYSE. Why?
It’s because the most famous companies in America and also other major companies around the world are listed in one of these two stock exchanges. The sheer quantity of shares traded and the amount of money involved is quite overwhelming.
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Source: NASDAQ vs NYSE (wallstreetmojo.com)
Although both are stock exchanges, the ways both of them work are different.
- NASDAQ is an acronym for the “National Association for Securities Dealers Automated Quotations.” NYSE is an acronym for the “New York Stock Exchange.”
- NASDAQ is a dealer’s market where buying and selling of shares are done through a dealer who arranges for the process to take place. NYSE is an auction marketAuction MarketAuction Market is a marketplace where the buyers and sellers trade stock by bidding. The price is calculated based on the highest amount a buyer is ready to pay and the lowest amount a seller is ready to accept. read more where buying and selling are done through a bidding system where an intermediary oversees the process.
- NASDAQ is a relatively new stock exchange that has started as a public organization, whereas NYSE is a very old stock exchange that has recently converted into a public organization.
- If you are going to invest in shares, you should definitely know in which stock market that particular company is likely to be listed. If you are looking to invest in a technology-oriented company or a particular company that has come up very recently and is slowly establishing itself with less capital investment, the company is most likely to be listed in NASDAQ. If you are looking to invest in a company that has been there for a very long time (even before your parents were born) and has been running steadily over some time with huge capital investmentHuge Capital InvestmentCapital Investment refers to any investments made into the business with the objective of enhancing the operations. It could be long term acquisition by the business such as real estates, machinery, industries, etc.read more, then that company is most likely to be listed in NYSE.
NASDAQ vs. NYSE Infographics
Let’s see the top differences between NASDAQ vs. NYSE.
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Source: NASDAQ vs NYSE (wallstreetmojo.com)
Key Differences
- One of the critical differences in the type of market. In NASDAQ, trading of shares/stocks is done through a dealer called “Market Maker” that creates a market for the security. But when you want to trade shares/stocks in NYSE, you can buy and sell them to others in the presence of not an NYSE employee that acts as a mediator called a “Specialist.”
- NASDAQ is where the trading happens electronically. The system matches the prices of buyers and sellers. On the other hand, in the case of NYSE, trading happens physically through the floor brokers when they enter the order into the universal trading platform.
- Companies that are listed in NASDAQ are usually the technology-based upcoming companies with massive potential for growth. On the other hand, the companies listed in the NYSE are usually the ones that are one of the long-lasting companies with huge turnovers and rich legacies.
- The types of shares that are traded in NASDAQ are more volatile, whereas the ones traded in NYSE are stable and well established.
- The cost involved in listing a company in NASDAQ is very low compared to that of NYSE, and hence you could find more new companies listed in NASDAQ.
NASDAQ vs. NYSE Comparative Table
| Basis for comparison | NASDAQ | NYSE | ||
| Founded | In 1971 by NASDAQ OMX Group. | In 1792 when 24 brokers signed the Buttonwood Agreement; | ||
| Type of market | Dealer’s Market. | Auction Market. | ||
| Leader in | Market share and volume of share trading. | The accrued market capitalization of NYSE’s listed companies; | ||
| Nature of shares traded | Volatile shares, having very good growth potential. | Shares that are stable and are well established. | ||
| Nature of trading | Telecommunications. | Physical. | ||
| Costs involved | Entry: $50000 to $75000.
Yearly Fees: $27500; | Entry: $500000.
Yearly Fees: Based on the number of shares listed; capped at $500,000; | ||
| Trade indices | The NASDAQ Composite, NASDAQ Biotechnology, and NASDAQ-100. | The Dow Jones Industrial Average, NYSE Equity Indices, and the NYSE Composite. |
Final Thoughts
Even though both are in the business of stock exchange, there are a lot of differences in how they function, the type of companies that they attract, the costs involved for the companies, etc.
There are also listing requirements that each company should meet for them to be listed on stock exchanges. The differences might not affect the stock that we are going to trade, but it is essential to know how each stock exchange works so that we could make well-informed decisions.
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