NASDAQ vs NYSE

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21 Aug, 2024

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Difference Between NASDAQ and NYSE

NASDAQ stands for National Association of Securities Dealers Automated Quotations exchange which is the exchange that allows investors to buy as well as sell the stock and also provides a key index that indicates the performance of the stock market. In contrast, NYSE stands for New York Stock Exchange, located in New York. It is the world’s largest stock exchange based on 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?

The most famous companies in America and other major companies worldwide list on these two stock exchanges. The sheer quantity of shares traded and the money involved are quite overwhelming.

Although both are stock exchanges, the ways they 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 shares perform through a dealer who arranges the process. NYSE is an auction market where buying and selling perform through a bidding system where an intermediary oversees the operation.
NASDAQ is a relatively new stock exchange that started as a public organization, whereas NYSE is a very old stock exchange that has recently converted into a public one.
If you invest in shares, you should know which stock market that particular company is likely to be listed on. For example, suppose you are looking to invest in a technology-oriented or specific company that has come up very recently and is slowly establishing itself with less capital investment. In that case, the company will most likely be listed on NASDAQ. On the other hand, suppose 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 investment. In that case, that company is most likely to be listed on NYSE.

Difference Between NASDAQ and NYSE

NASDAQ vs. NYSE Infographics

Let us see the top differences between NASDAQ vs. NYSE.

Key Differences

One of the critical differences is in the type of market. In NASDAQ, trading shares/stocks perform through a dealer called a “market maker” that creates a security market. 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. As a result, 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 listed in NASDAQ are usually technology-based upcoming companies with massive potential for growth. On the other hand, the companies listed on the NYSE are traditionally long-lasting companies with huge turnovers and rich legacies.
The types of shares traded in NASDAQ are more volatile, whereas the ones sold in NYSE are stable and well established.
The cost of listing a company on NASDAQ is very low compared to NYSE. Hence, you could find more new companies listed on 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 have very good growth potential.	Shares that are stable and well established.
Nature of trading	Telecommunications.	Physical.
Costs involved	Entry: $50,000 to $75,000. Yearly Fees: $27,500	Entry: $500,000. Yearly Fees: 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

Although both are in the stock exchange business, there are many differences in their function, the type of companies they attract, the costs involved, etc.

There are also listing requirements that each company should meet to list on stock exchanges. Again, the differences might not affect the stock we will trade, but knowing how each exchange works is essential to making well-informed decisions.