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Affluent Christian Investor | September 20, 2017

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What is the Difference Between the NYSE and Nasdaq?

The NYSE and Nasdaq exchanges are worth more than $35 trillion in market capitalization, making up a sizable portion of the global equities market.

However, while they are both large American stock exchanges containing listings that are household names, they are also very different in how they work.

COMPARING THE NYSE AND NASDAQ EXCHANGES

Today’s infographic from StocksToTrade.com explains the major differences between these two exchanges.

The NYSE and Nasdaq have significant differences, including the size and number of listings, how trades are made, and also how they are perceived by investors.

SIZE AND NUMBER OF LISTINGS

By the value of listed companies, the NYSE and Nasdaq are the two largest exchanges in the world.

The NYSE has over 2,400 companies that combine for $26 trillion in market capitalization. It’s also home to many of the big “blue chip” companies that have existed for decades, like Walmart, Exxon Mobil, or General Electric. This is partly because the exchange has existed since 1792.

Meanwhile, the Nasdaq has more companies than the NYSE, but has a wider spectrum in terms of the size of companies. Of course, the exchange is known for having the large tech-focused companies like Facebook, Google, and Amazon, but there are many smaller listings on the Nasdaq as well. In fact, there are around 1,200 smaller securities listed on the 46-year-old exchange with market caps of $200 million or less.

In total, there are over 3,800 companies listed on the Nasdaq, worth a total of $11 trillion in market capitalization.

OPERATIONAL DIFFERENCES

Aside from the obvious differences in the size and types of listings, the NYSE and Nasdaq also have significant operational differences.

The largest difference in the past was that the NYSE market was an auction market, while the Nasdaq was considered a dealer market. In the former, the highest bid for a stock is matched with the lowest asking price. In the latter, buying and selling happens in split seconds electronically through dealers. This difference has since changed as a result of trading technology, and both markets effectively connect buyers and sellers instantaneously in similar ways at the best price.

The Nasdaq has multiple market makers per stock – and some, like Apple even have 54 such registered makers. Meanwhile, the NYSE usually has one Designated Market Maker (DMM) per stock that ensures a fair and orderly market in that security. The NYSE also uses Supplementary Liquidity Providers (SLPs) as well.

DIFFERENT PERSPECTIVES

For various reasons, both stocks are seen a little differently by investors, as well.

The NYSE is seen as the stock market for “tried and true” securities that have been, and will continue to be, the mainstays of the financial world for decades.

The Nasdaq, on the other hand, is seen as a place for growth-oriented tech stocks. It was where the action was in the Dotcom boom and bust, and it’s the place where the world’s largest tech stocks are listed today.

 

Originally published on Visual Capitalist.

Visual Capitalist creates and curates enriched visual content focused on emerging trends in business and investing. Founded in 2011 in Vancouver and reaching millions of investors each year, Visual Capitalist’s work has been featured in The Wall Street Journal, Gizmodo, The New York Times, Maclean’s, The Vancouver Sun, and Business Insider.

 

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