Location
While both the NASDAQ and NYSE are located in New York City, the NYSE's location on Wall Street is generally considered more iconic, perhaps due to the exchange's human element. Though trading on the NASDAQ is fully automated, the NASDAQ still has a physical presence in New York City, owning a floor in the MarketSite tower that is at the center of Times Square.
How Trades Work
The way trades are executed is the biggest difference between the NYSE and NASDAQ. The NYSE is an auction market, so trades occur between buyers and sellers by matching their bid and ask prices respectively. If an investor wishes to buy stock that trades on the NYSE, her broker must call an order to the floor broker or enter it into the Universal Trading Platform (UTP). Each company's stock on the NYSE has a specialist who oversees all its trades; this person is not an NYSE employee but someone hired by the listing company. The specialist acts as an auctioneer to match buyers and sellers, as an agent to accept limit orders, and as a human support when markets are frenzied.
The NASDAQ is a little different. Instead of being an auction market, it's a dealer's market. Buyers and sellers make transactions through a dealer, also called a market maker. Stock brokers must either call the market maker to make a trade or enter an order into the online execution system. In the same system, market makers are also required to enter their prices (for both buying and selling) that they will honor for each security. The electronic trading system then matches the buyers and sellers and executes the trade.
Listing Process
In order for a security to be listed on the NASDAQ, a company must submit an application and meet the following initial requirements:
- Must have a minimum of 1,250,000 publically traded shares, with a regular bid price of at least $4.
- Must have at least three market makers for its stock.
- Must meet stringent government standards.
- Must either have aggregate pre-tax earnings in the past three years of at least $11 million, in two years at least $2.2 million, and no one year with a net loss, or a minimum aggregate cash flow of at least $27.5 million for the past three years, with market capitalization over the last 12 months of at least $550 million, with revenues at least $110 million. If a company has an average market capitalization over the last 12 months of at least $850 million and revenues over the last year of at least $90 million, it can also be listed.
To be listed on the NYSE, a company must submit a request along with the following: a list of corporate bylaws, five years of annual shareholder reports, copies of the company’s stock or bond certificates, the current year’s Form 10-K, a proposed schedule of expected stock distribution, and a proxy statement from the current year’s annual shareholder meeting.Moreover, the company is required to meet the following guidelines:
- Must issue at least 1.1 million shares to at least 400 shareholders.
- Market value of public shares must be at least $40 million, with a minimum share price of $4.
- Must have $10 million in aggregate pre-tax earnings for the last three fiscal years, including $2 million in most recent year. If this requirement cannot be met, the companycan also apply based on a global market capitalization of at least $500 million, with revenues of at least $100 million in the last year, and no negative cash flow in the three most recent years. The company can also be listed based on revenues of at least $75 million in the last fiscal year.
Listing Fee
The entry fee companies must pay to list stocks on the NASDAQ exchange is $50,000 to $75,000. Yearly fees are usually around $27,500.
The entry fee to list stocks on the NYSE is up to $250,000. Yearly fees are based on the number of shares listed and are capped at $500,000.
Listings fees are very profitable for the NASDAQ and NYSE. In 2011, the NASDAQ made $372 million, or roughly 22% of all its revenue, from listing fees and similar corporate services. For the NYSE, listing fees and similar corporate services accounted for 17% of its 2011 revenue, or $446 million.[1]
Companies Listed on Each Exchange
As of 2014, over 1,860 companies are listed on the NYSE with a market cap of $16.6trillion. The NASDAQ lists just over 2,900 companies with a market cap of over $ 8.5 trillion.
Examples of companies that trade on the NASDAQ include Apple, Facebook, Google, Microsoft, Intel, Kraft Foods, and Sun Microsystems. Examples of companies that trade on the NYSE are Bank of America, Coca-Cola, Wal-Mart, Citigroup, and General Electric.
Perceptions
The NASDAQ is perceived as a high-tech exchange and includes many firms that deal with the Internet or electronics. Its stocks are considered more volatile and growth oriented. Meanwhile, the NYSE is considered to be the exchange for well-established companies that have stable and established stocks.
Indices
NASDAQ indices include the NASDAQ Composite, NASDAQ-100, and NASDAQ Biotechnology.
Indices on the NYSE include the Dow Jones Industrial Average and NYSE Composite.
Other indices, like the S&P 500 and Russell 1000, include stocks listed on both exchanges.
References
FAQs
The NYSE is known for listing the stock of traditional blue chip and industrial companies. The NASDAQ is home to a number of Internet, biotechnology, and other companies in growth-oriented sectors. As a result, stocks on the NASDAQ have higher volatility. Currently, there are around 2,800 companies listed on the NYSE.
Why do companies choose Nasdaq over NYSE? ›
For decades, the NYSE didn't allow small, new companies to list. As a result, NASDAQ was a place where newer companies could list their IPOs. However, NYSE is larger and lists more established companies, but it is up to 70% to 80% cheaper for a company to list its stock on NASDAQ.
Is it better to be on Nasdaq or NYSE? ›
The Nasdaq is known for technology and innovation and is home to digital, biotechnology, and other companies at the cutting edge. As such, stocks listed on the Nasdaq are considered growth-oriented and more volatile. In contrast, companies that list on the NYSE are perceived as more stable and well-established.
Is the NYSE bigger than Nasdaq? ›
The NASDAQ and NYSE, both located in New York City, are the two largest stock exchanges in the world. The New York Stock Exchange (NYSE) has a larger market cap than the NASDAQ, which is known for its large selection of technology stocks (e.g., Google and Facebook).
Is Apple on Nasdaq or NYSE? ›
What exchange does Apple stock trade on? Apple stock is traded on the NASDAQ Global Select Market under the ticker symbol AAPL.
Is the S&P 500 NYSE or Nasdaq? ›
How the S&P 500 Works. That's it. The index includes 500 of the largest (not necessarily the 500 largest) companies whose stocks trade on the New York Stock Exchange (NYSE), Nasdaq, or Chicago Board Options Exchange (CBOE).
Why is Apple not listed on NYSE? ›
AAPL never traded on the NYSE, it began as a NASDAQ stock and remained a NASDAQ stock. When it could have gone to the NYSE, it chose to remain on the NASDAQ. This was a big decision at the time, because most stock decamped to the NYSE as soon as their market cap and liquidity qualified them.
What are the disadvantages of NASDAQ? ›
Cons of trading on the NASDAQ:
- Volatility: The NASDAQ is known for being more volatile than the NYSE, which can be a risk for investors.
- Governance concerns: Some investors have raised concerns about the governance practices of some NASDAQ-listed companies, which could impact their long-term prospects.
So, if you are looking to own a more diversified basket of stocks, the S&P 500 will be the right fit for you. However, those who are comfortable with the slightly higher risk for the extra returns that investing in Nasdaq 100 based fund might generate will be better off with Nasdaq 100.
Is it risky to invest in NASDAQ? ›
It's safe to invest in the stocks that make up the Nasdaq 100 -- as long as you have a long time horizon. Historically, the Nasdaq 100 has smashed the S&P 500 in terms of returns. But tech stocks tend to be more volatile than the overall stock market and perform especially poorly during recessions.
The company went public on the Nasdaq on July 29, 2021, under the stock ticker HOOD.
Who is NASDAQ owned by? ›
The NASDAQ is a U.S.-based stock market exchange and the second-largest stock exchange by market cap globally. NASDAQ stands for National Association of Security Dealers Automated Quotations and is owned and operated by NASDAQ Inc. NASDAQ Inc. is the parent organization to the NASDAQ stock exchange.
What is the richest stock market in the world? ›
New York Stock Exchange (NYSE) is the world's largest stock exchange located at 11 Wall Street, New York City, USA. NYSE has a market capitalisation of $26.2 trillion (world's biggest stock exchange) and has more than 2400 companies listed.
Can a company be listed on both NYSE and Nasdaq? ›
A company can list its shares on more than one exchange, which is often referred to as a dual-listing. A stock can trade on any exchange in which it is listed. However, companies must meet all of the exchange's listing requirements and pay for any associated fees in order to be listed.
How do I know if my stock is NYSE or Nasdaq? ›
If a stock symbol has three letters or fewer it is most likely a member of the New York Stock Exchange. If a stock has four letters or more it is most likely a member of the NASDAQ. Additionally, mutual funds will have 5 letters in their symbol and the last one will be an x.
Are companies traded on both Nasdaq and NYSE? ›
Short-answer: Yes, NASDAQ has a dual listing program that allows stocks traded in the NYSE to list on the NASDAQ stock market as well. However, it must need to meet all of the exchange's listing requirements and settle associated fees.
Why do tech companies choose Nasdaq? ›
Nasdaq has been considered a smaller, company-friendly exchange home to big tech stocks. The NYSE, though, with its NYSE American exchange and now with fees competitive with the once cheaper Nasdaq, is targeting similar firms.
Why is Nasdaq over the counter? ›
Although Nasdaq operates as a dealer network, Nasdaq stocks are generally not classified as OTC because Nasdaq is considered a stock exchange.
Why do companies list on different stock exchanges? ›
Dual listings allow companies to be listed on multiple stock exchanges. Usually, the process works with international companies that have presences in multiple markets. Companies that engage in dual listings benefits from the opportunity to raise more capital and increase their investment base.
Why is it good to invest in Nasdaq? ›
Here are some of the top reasons that the Nasdaq-100 Index matters to investors. The constituents of the Nasdaq-100 are some of the biggest global brands. Currently, seven of the 10 largest companies in the world in terms of market capitalization are listed on Nasdaq and are a part of NDX.
