The Nasdaq stock market vs the New York Stock Exchange

What's the difference between the Nasdaq and the New York Stock Exchange?

You'd be forgiven for not knowing the differences between the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automatic Quotation System (Nasdaq). After all, they're both based in New York and an absolute mouthful to say out loud.

Before diving in, if you want to know what the Nasdaq is or want a little more information about the New York Stock Exchange, then make sure to check out our blog posts. 

There are two main differences between the two exchanges. They are;

  1. The types of companies that are listed on the exchanges 

  2. The way they operate

Listed companies

The NYSE is home to a lot of 'blue chip' companies such as Walmart, Exxon Mobil and Pfizer. These sorts of businesses are well-established and have been around a while. As the New York Stock Exchange has been in operation since 1792, its reliable reputation continues to serve itself well for businesses that prioritise a reliable route to success. 

The Nasdaq is also home to reputable companies, but they tend to be the more tech oriented firms such as Google, Amazon and Meta. In more recent years, companies often look towards the Nasdaq for quicker growth, largely because it was home to many businesses that flourished during the dot-com bubble. The Nasdaq only began trading in 1971 which is why any companies founded before that date will more than likely be listed on the NYSE.

How they operate

The NYSE is an 'auction market' and the Nasdaq is a 'dealer market' and this makes the way they work very different.

Auction market

In the auction market, the NYSE acts as a centralised hub that allows trades to be executed as they match buyers and sellers when they want to trade stocks and shares. Traders don’t buy and sell from each other, rather, all transactions go through the stock exchange. 

Dealer market

In a dealer market, people will buy directly from each other meaning they are ‘market makers’. People don’t directly communicate with each other on the stock floor, instead, it is an electronic process with no communication other than the buy and sell requests. The price at which someone would buy a stock is known as ‘the bid’ and the price someone will sell is called ‘the offer’.

In a dealer market, one person’s sold stock directly becomes another person’s bought stock. Of course, you need a central body to facilitate this process, and that’s exactly what the Nasdaq does. 

As an investor or trader, you don’t need to worry too much about this. It doesn’t change the experience of buying a stock through our app

Don’t forget to visit our blog post on the opening and closing times for stock markets across the globe.

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Meet the authors

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James Ashoo

Senior Content Writer

James has been investing for over five years. His aim is to explain the hard stuff, easily! When he's not chewing your ear off about stocks and crypto, he'll most likely be telling bad jokes.

Harjas Singh

Harjas Singh

Chief Product Officer & Co-Founder

With a wealth of experience in fintech, Harjas is the man in the know when it comes to all things product. Investing features, chatting capabilities and thriving communities – he oversees all development on the Shares app!

Harry Harrison

Harry Harrison

Finance Writer

Harry is an experienced business writer, with a love for all things tech. In his free time, he enjoys reading, playing sport and winning at chess. He also loves posting inside the Shares app!