What Are Some Differences Between The NYSE And The NASDAQ?


Those who work with the stock market, whether they are traders or investors, usually pay close attention to the New York Stock Exchange and Nasdaq.

With almost twenty years of difference between their respecting foundations, these two markets are very similar in their primary purpose.

However, they also present different aspects that are important to evaluate if you are thinking about investing your money in stocks. Depending on these aspects, you may feel inclined to follow one over the other when working with the stock exchange market.

Exchange securities

The main difference that radicates on these two stock markets is the way they manage the securities on the exchanges. The NASDAQ works through a strategy called the dealer’s market. In this case, those who are involved in the transaction do the process through a third party, which would be the dealer or market maker.

The NYSE, on the other hand, make the transactions through an auction of the stocks with the participation of both buyers and sellers trying to win the highest or lowest bid. Using the regulation of auctions, the ones doing the exchange do it directly, without the participation of a third party.

Locations of the markets

The exchange markets usually are located in a specific building. This location is singularly known on the NYSE, located on Wall Street, in New York City. In this building is where the auction and the bids take place. The Nasdaq exchange market doesn’t own a location. The exchanges take place wherever it suits best to both the buyer and the seller. They can also be done online, so a physical location is not needed.

Controlling the traffic

The bids on an average day in a stock market can be chaotic, as many transactions happen in short amounts of time, other times having to wait without movement. To keep control over these transactions, the NYSE and the NASDAQ use different traffic controllers.

On the NYSE, the person in charge of this role is called the “specialist”, and provides the prices to both the buyer and the seller, facilitating them to reach a successful trade. The person that manages the traffic in NASDAQ is called the “market maker”, and it directly makes the trade with the interested buyer or seller, acting as the intermediate for another trader.

It is clear to see that one is blunter on the actions while the other look for subtle ways to make the sale, but in the end, both look for the same objective: do the transaction.

Volatility in the stock market

Comparing both markets throughout the years, the NYSE seems to be more firmly established than the NASDAQ market. The reason for this radicates on long-term clients, like Coca-cola and IBM, that continue to trust their investment on the New York Stock Exchange. NASDAQ has a reputation of being more volatile, placing their bids on riskier but potentially profitable stocks that grow fast on the market, such as Google and Apple.