Stock exchanges have proven to be a great investment, with the potential for massive returns. However, many people find that investing in stock exchanges is not their cup of tea. As a result, we’re going to tell you about two of the most important stock exchanges in the world. They are the New York Stock Exchange (NYSE) and the Nasdaq Stock Exchange. We’ll go over some points that will clear up your doubts and help you differentiate between them.
Nyse vs Nasdaq
The main difference between NYSE and Nasdaq is that the NYSE uses a different stock exchange method than the Nasdaq. The stock exchange method used by the NYSE is an auction, whereas the dealer exchange method is used by the NASDAQ to buy and sell stocks. There are other differences as well, such as fees, equities, and so on, which are discussed further below.
The New York Stock Exchange (NYSE) is the longest surviving and most well-known stock exchange in the world. The stock exchange was founded in the eighteenth century, in 1792, in New York. The first deal was made under a buttonwood tree, and the endorsement was given the name buttonwood agreement. The market has evolved significantly since its inception, but the configuration has remained consistent.
Nasdaq, on the other hand, arrived after a long period. It first appeared in 1971. The stock exchange market was established by the National Association of Securities Dealers (NASD). They are now referred to as FINRA (Financial Industry Regulatory Authority). Unlike the New York Stock Exchange, Nasdaq uses a dealer system to exchange stocks. It’s also known as the electronic version because it makes electronic stock exchanges easier.
Comparison Table Between Nyse and Nasdaq
| Parameters of comparison | Nyse | Nasdaq |
| Year of origin | 1792 | 1971 |
| Method of stock exchange | Auction | Dealers |
| Is it an electronic stock exchange market? | No | Yes |
| The traffic is monitored via | Experts | The dealers (market-makers) |
| Market capitalization | More | Lesser |
What is Nyse?
The Nyse, or New York Stock Exchange, is based in New York City, and the stock exchange is held there. It is the world’s oldest stock exchange, having been founded in 1792 in the eighteenth century. When it comes to the stock exchange market, this American exchange is one of the largest. It has the highest market capitalization in the stock market. The auction method is used by Nyse to conduct the exchange in the market. In this stock exchange market, there is more liquid money transfer. NYSE is now a part of the intercontinental exchange. When we look back at the history of NYSE, we can see that it all started with a buttonwood endorsement witnessed by 24 people. It grew gradually over time, and no other stock exchange market has yet to overshadow its essence.
In the NYSE, trading takes place physically, whereas, in the NASDAQ, it does not. Although some trading takes place electronically on the New York Stock Exchange, the physical body still dominates this practice. The stock trading or exchange that takes place on the New York Stock Exchange is one-to-one, meaning there is no third party involved. The governing or monitoring of the market is done by experts in the New York Stock Exchange. They ensure the smooth flow of money and its stability.
What is Nasdaq?
Nasdaq, on the other hand, is a stock exchange market-based in New York. However, it was founded much later than the New York Stock Exchange. The Nasdaq was founded in 1971. Unlike the former, the Nasdaq is a stock exchange market where stocks are traded through a dealer. That there is a third party involved who acts as a conduit between the equities exchanges. Another significant distinction between the NYSE and the Nasdaq is that, unlike the former, the latter conducts all of its transactions electronically. For the latter, there is no physical body. Nasdaq was founded by the NASD, which is now known as FINRA (Financial Industry Regulatory Authority). Although NASDAQ’s market capitalization is lower than that of the New York Stock Exchange, it is still one of the largest in the stock exchange market.
The way Nasdaq works is that it has individual investors who deal with various stocks, and the dealers, also known as market makers, are the intermediaries who facilitate stock exchanges. In Nasdaq, you can expect a mix of high-end companies and investors, as well as average investors. As a result, it has a diverse set of investors. There is a method of collecting fees from businesses that allows them to increase their revenue.
Main Differences Between Nyse and Nasdaq
- The New York Stock Exchange (NYSE) has a larger market capitalization than the Nasdaq.
- The New York Stock Exchange (NYSE) was founded in 1792, while the Nasdaq was founded in 1971.
- The NYSE has a physical marketplace, whereas the NASDAQ does not.
- NYSE is not an entirely electronic stock exchange market, whereas Nasdaq is.
- The Nyse is an auction-based market while the Nasdaq is a dealer-based market.
Conclusion
The stock exchange is held at the Nyse, or New York Stock Exchange, which is based in New York City. Trading on the NYSE takes place physically, whereas it does not on the NASDAQ. Although some trading on the New York Stock Exchange is done electronically, the physical body still dominates this practice. The New York Stock Exchange’s stock trading or exchange is one-to-one, which means there is no third party involved. The New York Stock Exchange’s experts are in charge of governing or monitoring the market.
Nasdaq, on the other hand, is a New York-based stock exchange. The London Stock Exchange, on the other hand, was founded much later than the New York Stock Exchange. The Nasdaq, in contrast to the former, is a stock exchange market where stocks are traded through a broker. Despite having a lower market capitalization than the New York Stock Exchange, Nasdaq is still one of the largest stock exchanges in the world. Individual investors deal with various stocks on the Nasdaq, and dealers, also known as market makers, are the intermediaries who help stock exchanges run smoothly.
The primary distinction between the NYSE and the Nasdaq is that the NYSE employs a different stock exchange method than the Nasdaq. The NYSE uses the auction stock exchange method, whereas the NASDAQ uses the dealer exchange method to buy and sell stocks.
References
- https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.1997.tb04819.x
- https://www.sciencedirect.com/science/article/pii/0304405X9090050A