The Rivalry Between NYSE and Nasdaq

One of the biggest rivalries in the stock marketplace fairly exists between the two New York-based stock exchanges and two of the largest exchanges in the world for that matter.

The New York Stock Exchange or NYSE is the oldest stock exchange in the world. Launched in 1792, NYSE holds more than 200 years of operation and it fairly owns the title of the world’s leading equity-placed marketplace. It is an auction style market, where buyers and sellers physically trade by matching their “bid prices” and “ask prices” respectively. Every stock has a specialist, who is not an employee of NYSE, and acts as the market maker for that stock and the middleman for the execution of its trades. The National Association of Securities Dealers Automated Quotations NASDAQ) on the other hand, is a computer-based dealer’s market. It started off in the year 1971 as the world’s first trading market that did not have a physical trading floor. Its exclusively electronic transactions are conducted through a dealer, a member firm of NASDAQ, that matches buyers and sellers in split seconds, and because of this, it attracts most of the tech companies worldwide. So even though the NYSE is the leader in the market capitalization co ponent of the stock market, the NASDAQ takes the first place when it comes to the market share acquired.

Both of these markets demand certain requirements from the companies to be listed on their stock exchanges. The NYSE has more stringent terms and therefore only a few types of companies can list their stocks, while the NASDAQ allows more companies to be listed and at the same time has about 70-80% lower entry fees, giving the chance to smaller companies or start-ups to join their market. It is a fact that, a company which can meet the NYSE criteria can generate more funds when holding their IPO there, but the NASDAQ has offered better returns historically.

Therefore, the nature of the companies listed in each stock exchange is remarkably different. The NYSE is perceived as an exchange for the well-established, large and financially-secure co panies, such as Coca-Cola, Wal-Mart, Citigroup, IBM, and General Electric, whereas the NASDAQ attracts more technology-based or quickly-growing companies, such as Apple, Facebook, Google, Microsoft, Intel and Kraft Foods. The first one is a choice for lower volatility and higher market capitalization prospects and the latter is viewed as a high tech, forward-looking and growth-oriented exchange.

It is a fact that a neck to neck competition incessantly exists around the two New York-based exchanges. NYSE is the largest stock exchange in terms of market capitalization and therefore demands strict qualifications, but NASDAQ outpaces other markets when the turnover aspect is brought up and provides reduce up-front costs. In the end, though, the question lies on whether the company is searching for stable and established stocks or a fast-growing and yet risky stock market.