Listed companies source their capital through debt or equity. Debt and equity are traded in an organized and regulated financial market called a stock exchange market. In the stock exchange market, companies or individuals are able to sell and buy securities like equity, notes, bonds, and other financial instruments. In the United States, there are a number of stock exchanges among them the New York Stock Exchange (NYSE) and National Association of Securities Dealers Automated Quotation (NASDAQ) stock market.
Similarities and Differences
Both NYSE and NASDAQ are stock exchange markets dealing in the trading of different securities. These stock exchanges are the largest in the world – NYSE being the largest then NASDAQ. NYSE is also the oldest - founded in 1792 while NASDAQ in 1971. The two are global stock markets with legacies in different areas. NYSE is known as the Big Board for its large display board used to show stock prices while NASDAQ is the world’s first electronic stock market.
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The two stock exchanges have different trading principles. NYSE is an auction market where buyers and sellers trade by comparing bid and ask prices to make their buying and selling decisions. On the other hand, NASDAQ is a dealers’ market where buyers and sellers have to trade through a dealer. Trading in NYSE is physical while in NASDAQ, trading is through calls and their online system.
The two stock exchanges provide investors with different markets to access securities like stocks, ETFs, options, and bonds. Both of them provide companies with a market to acquire capital through these securities. However, both demand different requirements and fees when listing and their choice of companies are different. The initial requirements differ greatly especially, because of their different trading principles. In the choice of companies to list, NYSE has the renowned and stable companies like Citigroup and IBM while NASDAQ has the fast-growing internet and tech-based companies like Facebook and Google.
