Differences between the new York Stock Exchange and the Nasdaq

Almost everything that could be identified as a difference between the New York Stock Exchange (NYSE) and the NASDAQ in the past has either disappeared or lessened over the years.  [Note: NASDAQ is its full name.  That used to be an acronym for National Association of Securities Dealers Automated Quotations, but the official name has been changed to just NASDAQ.]  By now these two stock market giants are far more similar than different.

The NYSE of course is much older, tracing its history all the way back to 1792.  The NASDAQ is a comparative upstart, having come on the scene in 1971, and even then not as a stock exchange but as only an electronic quotation system.

The most significant difference between the two exchanges has traditionally been in how they conduct trades.  The NYSE has a physical location – the famous trading floor on Wall Street with the frenzied activity (where Abbie Hoffman threw dollar bills down from above to watch the traders dive for them).  The NYSE is an auction market where floor traders and floor brokers make deals, and each stock has a specialist to act as a market maker to facilitate the trading of that stock by buying and selling as needed to ensure a fair and orderly market.

The NASDAQ, on the other hand, is a fully automated system that has only a virtual existence in cyberspace.  The NASDAQ is a communications network of thousands of computers, with market makers for each stock whose function is to compete for customer orders by displaying buy and sell quotes for a guaranteed number of shares.

As the NYSE has become more automated over the years, this has become less of a difference.

The NYSE by reputation is the exchange for the staid and stodgy mega-corporations. These are the old guard, the big name companies that have seemingly dominated the world economy forever, whereas the NASDAQ is the exchange for newer, smaller companies trying to make a name for themselves, especially those in newfangled fields of electronics, Internet, high tech, etc.  The NASDAQ is thought of as more hospitable to hip newbie companies on the rise, where if those companies do indeed hit the big time, they will then seek a listing on the NYSE.

However, as the NASDAQ has grown and become more established, this difference too has diminished.  The NASDAQ now has plenty of heavyweights.  Even if companies are still more likely to start with a NASDAQ listing, it’s become more common for them to stay there no matter how big and successful they grow, rather than switching to the NYSE.

It still costs a bit more to get a listing on the NYSE than the NASDAQ.

The NYSE used to have considerably more stringent requirements for being listed than the NASDAQ, though by now there’s little if any difference.

Again, these two stock exchanges today are far more similar than different.