Nasdaq vs. NYSE: a comparison of the two leading stock exchanges

12 MIN READ
Crypto exchanges and trading
14 May 2024
Content
[show]
[hide]

Nasdaq exchange

Nasdaq exchange

The Nasdaq exchange came into existence in 1971, when the National Association of Securities Dealers NASD registered the Nasdaq computer system. Nasdaq stands for National Association of Securities Dealers Automated Quotations - the automated quotation service of the National Association of Securities Dealers. The exchange started out as an electronic quote board. The most interesting thing is that initially it was impossible to trade through it, but open quotes reduced the exchange spread, which was convenient for investors. Besides, there was an opportunity to see trading volumes. Soon the trading functionality was successfully realized, and Nasdaq turned into a full-fledged exchange. Only ten years after its creation, in 1981, 37% of American securities were traded on Nasdaq, which amounted to 21 billion shares.

Nasdaq is considered to be the most technologically advanced exchange. It was basically founded as an alternative to traditional exchanges. In the 80s, many traders transacted by phone, but in 1987, during the stock market crisis, brokers could simply keep their phones off the hook. To solve this problem, Nasdaq was transformed into an all-electronic trading system. Investors were able to place orders to buy or sell stocks through brokerages. This is why it became popular among tech companies and new startups who prefer its innovative and decentralized approach to trading. In fact, the Nasdaq exchange has proven that you don't need a premise to operate successfully.

At the moment, more than 3,000 companies' stocks are traded on the exchange, including well-known companies such as Apple, Microsoft, Amazon and Tesla. The NASDAQ exchange conducts about 1.8 billion trades daily, which is more than any other stock exchange in the United States.

Nasdaq

Top 20 stocks on the Nasdaq

In addition to stocks, you can buy ETFs, bonds and derivatives on commodities, currency pairs and even cryptocurrency. If you thought that these are all exclusively American companies, this is not the case at all. You can find stocks of companies from more than 50 countries on the exchange, for example: Samsung (SSNLF) is a South Korean electronics company, Adidas (ADDYY) is a German company that produces sportswear and footwear.

In addition, Nasdaq is also a public company whose shares are traded on this exchange.

Indices

The Nasdaq Composite (IXIC) and Nasdaq 100 indices are two well-known indices used to track the performance of various companies that trade on the Nasdaq exchange.

Nasdaq Composite (IXIC): this index was created along with the opening of the exchange in 1971. It provides an overall picture of the performance of all companies including technology, biotechnology and other companies listed on the Nasdaq exchange. Nasdaq Composite includes thousands of companies and is widely used to track the overall trend in technology and other markets.

Nasdaq 100: This index focuses on larger, more liquid companies on the Nasdaq exchange. The Nasdaq 100 excludes companies in the financial sector and includes one hundred of the largest companies such as Apple, Amazon, Microsoft, Adobe, Cisco, Facebook and others. This index is often used to measure the performance of large technology companies.

Companies from the consumer sector occupy 24% of this index and include companies involved in hospitality, retail, and travel services - we're talking about companies like Starbucks, Amazon, and Costco. Innovative healthcare companies make up 11% of the index.

Nasdaq trading hours

The trading session on the Nasdaq exchange is divided into two parts:

  • Pre-market - from 4:00 a.m. to 9:30 a.m. EST (11:00 a.m. to 4:30 p.m. Kiev Daylight Time). During this time investors can place orders to buy or sell shares, but they are not executed until the main trading session begins.
  • The main trading session (regular session) - from 9:30 a.m. to 4:00 p.m. EST (4:30 p.m. to 11:00 p.m. Kiev Summer Time). During this time all orders to buy or sell shares are executed.
  • Post-market - from 16:00 to 20:00 EST (23:00 to 03:00 Kyiv Summer Time). This is the period of asset trading that takes place after the standard trading session closes. During this time period investors and traders can continue to make transactions, but it is not recommended to do so, because at this time the market goes into a phase of very low liquidity. The spread at this time is multiplied, which can have a very negative impact on your trades. Basically traders and investors use limit orders to work at this time, but they are not always executed.

It is important to mention that these hours of operation may shift by an hour due to time translation.

NYSE Exchange

NYSE Exchange

The New York Stock Exchange (NYSE), also known as the New York Stock Exchange, is one of the largest and oldest stock exchanges in the world. It is located in New York City and serves as a trading floor for many securities, including stocks of large companies. The NYSE has a long history dating back to 1792. Unlike the Nasdaq, this exchange has a facility, it is located at 11 Wall Street and has a floor space of approximately 1,500 square meters.

The exchange was founded on May 17, 1792, when 24 brokers and merchants, led by a Wall Street financier and banker, signed the Buttonwood Agreement. This document became the basis for the creation of a financial community that exchanged securities.

In the 19th century, the NYSE began to grow rapidly, becoming a trading center for shares of many industrial companies, including railroads and oil companies. In addition, telephone communication was introduced in 1878, making it even easier to communicate with a broker.

In the 1920s, the NYSE introduced technological innovations such as electricity and ticker-tape, simplifying and speeding up trading processes. The ticker-tape was a system of displaying actual securities on the exchange. This innovation allowed brokers and traders to get instant information on current quotes and trading volumes, which sped up decision-making.

The New York Stock Exchange (NYSE)

In 1934, the Securities and Exchange Commission (SEC) registered the New York Stock Exchange (NYSE) as a national stock exchange. This recognition solidified the NYSE's status as a key participant in the U.S. financial markets.

In 1950, the NYSE introduced AMEX radio, broadcasting quotes, market index movements, and other important information. This radio was a way to attract even more customers by giving them access to up-to-date market data. Over the next 10 years, the total value of stocks on the exchange increased from $12 billion to $23 billion.

In 1975, the New York Stock Exchange (NYSE) changed from a for-profit entity to a non-profit organization. This important step was taken in order to increase transparency and efficiency of trading, as well as to provide fairer conditions for all market participants. The non-profit status emphasizes first and foremost the exchange's commitment to the public and investors, rather than maximizing profits for shareholders.

In 2006, the NYSE merged with Archipelago Exchange (Arca), an electronic exchange. This merger made the exchange's securities more accessible to investors. The exchange was now able to trade online, but interestingly, during the COVID-19 pandemic in March 2020, when the New York Stock Exchange (NYSE) trading floor faced a temporary closure due to quarantine measures, the exchange had to fully transition to electronic trading, and this despite the fact that at the time about 18% of the NYSE's total trading volume was done on the trading floor. This was a response to changing conditions and requirements, emphasizing the flexibility and adaptability of financial institutions in complex situations.

More than 2,800 companies' shares are traded on the NYSE. The daily trading volume of stocks on the NYSE averages about 1.46 billion shares. This represents about 25% of the total volume of shares traded on all U.S. exchanges.

Nasdaq vs. NYSE

Top 20 stocks on the NYSE

Indexes

In 1966, the New York Stock Exchange introduced a composite index.

The NYSE Composite Index (^NYA) is a stock index that tracks the value of all stocks traded on the NYSE exchange. The index includes stocks from over 2,800 companies, including both U.S. and non-U.S. companies. The index includes both large corporations and smaller companies, giving investors a more comprehensive view of the market.

The NYSE Composite index is one of the most popular stock indexes in the world. Indices such as the NYSE Composite Index provide investors with information about the current state of the market. They are updated on a daily basis.

NYSE opening hours

NYSE is open Monday through Friday, from 9:30 a.m. to 4:00 p.m. EST. This means that in Kiev the exchange is open from 16:30 to 23:00 Kiev time (EET).

The trading session on the NYSE is divided into two parts:

  • Early opening (pre-market) - from 4:00 to 9:30 a.m. EST (11:00 to 4:30 p.m. Kyiv Daylight Saving Time). During this time, investors can place orders to buy or sell shares, but they are not executed until the main trading session begins.
  • The main trading session (regular session) - from 9:30 a.m. to 4:00 p.m. EST (4:30 p.m. to 11:00 p.m. Kiev Summer Time). During this time all orders to buy or sell shares are executed.
  • Extended Hours (Post-market): from 16:00 to 20:00 EST (23:00 to 03:00 Kyiv Summer Time). This is the period of post-market trading, which begins immediately after the end of the main trading session. It is important to note that post-market trading is usually characterized by less liquidity compared to regular trading hours, so trading during this time is not recommended.

These trading hours may shift by an hour due to time translation.

Nasdaq listing requirements

The listing requirements on the Nasdaq Exchange depend on which exchange platform a company wishes to list its shares on. There are three venues on the Nasdaq exchange:

  • Nasdaq Global Select Market (formerly Nasdaq Global Market) is the exchange's most prestigious floor, where shares of the largest companies in the United States and the world are traded. The listing requirements on this floor are the strictest.
  • Nasdaq Global Market is a platform for companies that meet less stringent requirements than those for listing on the Nasdaq Global Select Market.
  • The Nasdaq Capital Market is a marketplace for smaller companies that meet even less stringent requirements than those for listing on the Nasdaq Capital Market.

Nasdaq Global Select Market: in order for a company to list its shares on this marketplace, it must meet all the criteria of one of 4 standards.

Nasdaq listing requirements

Nasdaq Global Market: in order for a company to list its shares on this platform, it must meet all the criteria of one of the 4 standards.

NYSE listing requirements

Nasdaq Capital Market: in order for a company to list its shares on this marketplace, it must meet all the criteria of one of the 4 standards.

Advantages and disadvantages of the Nasdaq

NYSE listing requirements

A foreign private issuer on the New York Stock Exchange (NYSE) can choose between listing standards applicable to local issuers and alternative standards for foreign private issuers. The alternative listing standards, which focus on the global distribution of a foreign company's stock, are only mandatory if that company's stock is traded and enjoys liquidity outside of the United States.
Any issuer, whether local or foreign private, is required to meet specified minimum distribution and market value criteria and to choose one of the financial standards.

NYSE advantages and disadvantages

Where is the listing more prestigious?

A very important difference between the two exchanges is their positioning and perception by companies:

The NYSE predominantly trades traditional large company stocks, the so-called blue chips, while NASDAQ provides a platform for innovative and technological companies. One of the reasons for this is the cost of listing on the exchanges, since for a company to appear on them, not only does it have to meet the requirements, but it also has to buy an "entry ticket." NASDAQ gives access to the exchange with lower start-up costs of $55,000-$80,000 compared to the higher costs of $150,000 to $295,000 on the NYSE.

In addition, NYSE requirements include maintaining internal audits and complying with corporate governance rules. In contrast, there are no such obligations on the NASDAQ, making this exchange more attractive to startups. Importantly, despite the higher listing price, companies on NASDAQ should not be considered less valuable - they simply choose an environment that promotes rapid growth, even in the face of increased volatility.

Liquidity and Volatility: Nasdaq vs. NYSE

The Nasdaq exchange is generally considered more liquid than the NYSE exchange. This is due to several factors. First of all, it is considered to be so due to the fact that more than 3000 companies' shares are traded on Nasdaq. It turns out that on the Nasdaq exchange there is simply a greater range of choices, that is, the exchange is considered more liquid probably due to the fact that there are more assets that can show increased volatility.

For example, NVIDIA, a huge and very liquid and volatile company, is traded on the Nasdaq. Another example would be Meta, another volatile and huge company. Accordingly, this is what makes the Nasdaq a bit more liquid than the NYSE. In addition, the Nasdaq exchange is dominated by electronic trading, while the NYSE exchange still utilizes traditional trading methods such as open auction bidding. Electronic trading provides greater liquidity than traditional trading methods because it allows investors to quickly and easily place orders to buy or sell shares.

The Nasdaq exchange is also considered and more volatile than the NYSE exchange. This is the case because the Nasdaq is dominated by technology companies, which tend to be more volatile than companies in other industries. In addition, options are more widely used on the Nasdaq than on the NYSE.

Options are financial contracts that give an investor the right (but not the obligation) to buy or sell an asset at a specific price at some point in the future. Options are like contracts that say you can buy or sell something at a fixed price in the future. They give you a choice, but you are under no obligation to do so. For example, a call option allows you to buy an asset (like a stock) at a predetermined price if you want to. Such speculation can contribute to increased volatility on stock exchanges.

Advantages and disadvantages of the Nasdaq

Advantages of Nasdaq

  • High liquidity. Nasdaq is one of the most liquid stock exchanges in the world. This means that stocks are easy to buy or sell at a fair price.
  • Broad coverage. Nasdaq trades stocks of companies from a variety of industries and countries. This gives investors a wide range of choices for investing.
  • Electronic trading. Nasdaq utilizes electronic trading, which provides faster and more efficient trading than traditional trading methods.
  • Transparency. Nasdaq has strict disclosure requirements that provide transparency to investors.

Disadvantages of Nasdaq

  • High volatility. Nasdaq is considered to be more volatile than other exchanges. For traders, this point will be an advantage rather than a disadvantage, because where there is higher volatility, there are more movements to capitalize on. However, for investors, it is not such a big plus, as stock prices can fluctuate quite a lot.
  • Less prestige. Compared to the NYSE, the Nasdaq may have less prestige due to its profile, which focuses on the technology sector and startups.
  • No trading room: Nasdaq unlike the NYSE does not have a traditional auction trading room, which may reduce some of the traditional aspects of exchange trading.

NYSE advantages and disadvantages

NYSE Advantages

  • High capitalization. NYSE is the largest stock exchange in the world in terms of market capitalization. This means that shares of the largest companies in the world are traded on the exchange.
  • Traditional status. The NYSE has over 200 years of history, making it one of the oldest and most respected stock exchanges in the world.
  • Stringent listing requirements. The NYSE has strict listing requirements that ensure investor protection.

Disadvantages of the NYSE

  • Liquidity. The NYSE is considered a less liquid exchange than the Nasdaq. This means that stocks may be harder to buy or sell at a fair price.
  • Lower growth rate. The NYSE trades stocks of companies in more traditional industries, which tend to have lower growth rates than the technology companies that dominate the Nasdaq.
  • Compared to the Nasdaq, the NYSE may have more stable and less volatile stock prices, which may not appeal to traders looking for higher volatility and potential profits.

Nasdaq vs NYSE: which is better? CRYPTOLOGY Team Opinion

Nasdaq and NYSE are two world-famous exchanges, each with its own peculiarities. Nasdaq is usually associated with something more modern, at least for the reason that it was originally founded as an alternative to traditional exchanges, launched as an electronic trading system. It is attractive to startups because it offers a simpler and more cost-effective way to list shares compared to the NYSE.

On the other hand, the NYSE is considered more traditional. It still retains traditional floor trading (this also gives it a special atmosphere and status). Listing on the NYSE is often perceived as more prestigious, especially for large, established companies. This is due to the history and reputation of the NYSE, which has long been considered the world's leading stock exchange.

However, the choice between Nasdaq and NYSE depends on the specific goals and strategies of companies or investors. Nasdaq attracts innovative and technology companies, while the NYSE attracts traditional industrial giants. It is also important to consider the differences in the structure and trading rules of these exchanges. Nasdaq uses a system of market makers to support trades, while the NYSE uses a hybrid model that includes both floor traders and electronic trading.

The important point is that only white-owned businesses that are subject to legislation and regulator can qualify for listing on such large exchanges. Before listing on the exchange, the company is checked on all aspects related to the payment of taxes (including checking whether all employees are officially employed). By the way, this is one of the main reasons why Coinbase shares are traded on the exchange, but Binance is not on it.

Nasdaq and NYSE offer different opportunities and experiences for companies and investors. Choosing between the two depends on many factors, including company size, industry, corporate strategy, and listing requirements. Both exchanges play a key role in the global financial marketplace, and you can't say one is better than the other - they're just different.

Frequently asked questions about the Nasdaq and NYSE exchanges

What is Nasdaq?

Nasdaq (National Association of Securities Dealers Automated Quotations) is an American stock exchange that was originally established in 1971 as an electronic system for automated securities trading. Nasdaq is notable for being the first electronic exchange and also focuses on technology and innovative companies.

What proprietary indexes exist on the Nasdaq exchange?

The Nasdaq exchange has two main indexes that are used to track the performance of the various companies that trade on the exchange: the Nasdaq Composite (IXIC) and the Nasdaq 100.

What is the NYSE?

The NYSE, or New York Stock Exchange, is one of the largest stock exchanges in the world. It is located in New York and is considered one of the oldest stock exchanges in the United States.

What proprietary indexes exist on the NYSE exchange?

The NYSE has the NYSE Composite (^NYA) index, which was introduced in 1966, is a stock index that tracks the value of all stocks traded on the NYSE exchange.

Which stock exchange is more prestigious?

The NYSE is considered more prestigious because it is more difficult and costly to list on, while Nasdaq is geared towards startups and innovative technology companies.
Latest posts
Latest posts —
Crypto exchanges and trading
What is cex/dex?
Crypto exchanges and trading
What is cex/dex?
Life is a numbers game, a balance of assets and liabilities, a force that spurs the pursuit of happiness, of success. It works the same way in the world of finance, where every dollar counts - the stock exchanges are the main engine of this world.
SUBSCRIPTION TO NEWS
Join our mailing list. No spam.
Only exclusive offers.