Stock exchanges are online or physical venues where such financial securities as shares, unit trusts, bonds, and derivates are traded. The New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ) are the two premium marketplaces for stocks in the United States. They account for a substantial volume of trading in equities and other financial instruments.
Typically, stock exchanges function as continuous auction markets through which buyers and sellers transact via an electronic trading platform or open outcry. Although NASDAQ and NYSE are stock marketplaces, their operating models, types of featured companies, and listing requirements for firms wishing to be enlisted differ significantly.
Similarities Between NYSE and NASDAQ
NASDAQ and NYSE share various similarities, including the purpose of establishment, listing requirements, and the imposition of enlistment fees. According to Mansaku et al., both entities function as a platform through which corporates and investors buy and sell financial instruments. Moreover, NYSE and NASDAQ integrate traffic controllers to undertake various roles in the operational structures.
Additionally, both have established standard requirements, which an organization should meet before its stocks are accepted for trading. Such specific preconditions include the minimum earnings threshold, initial stock pricing criteria, the lowest number of years of operating history, and the entry stock and annual listing fees.
For instance, NYSE and NASDAQ demand US$10 million and US$11 million in pretax incomes for the past three years, respectively. Therefore, NYSE and NASDAQ share various similarities, including detailed listing requirements, initial and annual listing fees, and purpose of establishment.
Differences Between NYSE and NASDAQ
Although NYSE and NASDAQ share many similarities, they differ significantly in their market type, stock volatility, featured organizations, and operating platforms. The former runs its functions on a hybrid framework combining both electronic and floor exchange transactions.
Conversely, NASDAQ is purely an online marketplace with no physical trading. Additionally, NASDAQ is a dealer market, while NYSE is an auction exchange platform, highlighting the participants’ distinctiveness. For instance, in NYSE, the players buy and sell directly from each other. On the contrary, NASDAQ’s structuring does not allow buyers and sellers to engage in trading directly but only transact through a dealer.
Moreover, NASDAQ features more growth-oriented companies with highly volatile stocks, while NYSE typically trades traditional and established firms with a history of conservative business practices and stability. The two stock exchange firms also differ in the nature and role of the deployed traffic controller, with NASDAQ’s market marker maintaining liquidity, inventories of diverse stocks, and promoting trade efficiency.
Conversely, NYSE’s designated market makers or specialists open and close auctions and maintain market stability. Two significantly popular stocks in the two markets include Amazon on NASDAQ and Pfizer on NYSE.