NYSE vs.

NASDAQ

By Hilary Everist and Jessica Sandoval

New York Stock Exchange

HistoryCreated in 1792 by the Buttonwood

AgreementLocation gives Wall Street its prominent

place in the financial industryOperates as a continuous auction market;

buyers and sellers compete to complete a transaction at a price acceptable to each

Largest Exchange in regards to capital traded

Member Firms• Direct trading on the floor- own one of the

1366 seats on the Exchange• Highest Price: 1929 for what would be $6

million today• Currently, prices are around $1 million• Member firms may complete transactions for

their own account or as brokers for a commission

• The Exchange governs its members, and customers’ orders take precedence

Listing on NYSE• NYSE has 3,000 companies’ shares listed• Listing Requirements for Domestic Companies

– Going Concern– Market Value of publicly held shares of $40

million– Total of 1.1 million common shares publicly held– Demonstrate Earning Power under Competitive

Conditions• $2.5 million in most recent year and $2 million for each

of the preceding two years• Aggregate of $6.5 million with most recent fiscal year’s

being at least $4.5 million

Specialist• Each common stock has one specialist• A specialist may be designated for more than one

common stock• Helps bring buyers and sellers together to

complete transactions at a fair price• Once an order is received

– Immediately match ask and bid– Conduct an auction with market makers

• Responsible for maintaining an orderly market• May represent customer orders or orders from

his or her own account

National Association of Securities Dealers Automated Quotation

HistoryFounded by National Association of Securities

Dealers (NASD) to provide more recognition for the over-the-counter securities market

Trade began February 8, 1971 with over 2,500 OTC securities

World’s first virtual trading floorNASDAQ is an electronic stock marketEfficient, convenient and diversified market

participants

Timeline1994 NASDAQ made history and went beyond

NYSE in annual share volume1998 NASD and the American Stock Exchange

(AMEX) mergedAMEX:

Primary marketplace for US equities, options and derivative securities

Physical trading floor.

Today…Primary market for trading NASDAQ-listed

stocks and on average lists more companies and trades more shares per day than any other U.S. market

Many new, high growth and volatile stocksTherefore attracts many technology stocks and

on the rise companies

NASDAQ StructureAll updates are made through a computer

and telecommunications system almost instantaneously Price-Time Priority Model

Creates level playing field for all participants Dealers’ market

Brokers are only permitted to buy and sell stocks directly through a market maker.

NASDAQ relays on several market makers creates a more competitive price environment for

each security

Market Makers Investment company that registers with the SEC to buy and sell a

particular stock on the NASDAQ Registered NASDAQ market makers and order-entry firms can

become a NASDAQ market participant Strict procedure and application to become a market maker

followed by many rules and regulations Fill orders for their company’s customers and for their own

account AKA Dealers to profit from the difference between the bid and ask

price for the Stock. A market maker will hold a certain number of stocks on his own

books and must maintain two-sided markets during exchange hours.

Market makers are obligated to buy and sell at their displayed bid and ask prices

Market makers compete for the best price Matches are completed with price preference first and then by the

time they were posted.

NASDAQ Process

NASDAQ MarketSiteTimes Square in New York City

Physical presence of NASDAQSeven story cylindrical tower with an exterior

wall that is a LED electronic video display that provides current financial information market quotes, financial news and

advertisements 24 hours a day.

NASDAQSuccessfully achieved economies of scaleIt is the largest U.S. electronic stock market

with approximately 3,900 listed companies globally.

The second largest exchange in the United States and the world’s largest and most liquid market for Exchange Traded Funds (ETF).

NYSE vs. NASDAQ

ConclusionWe believe that NYSE and NASDAQ do not

directly compete for they have each developed their own unique place in the financial market.

Both demonstrate sustainable growth by maintaining their core principles while adapting to advancements in technology.