Understanding the NYSE and NASDAQ

The NYSE and NASDAQ are the two giants of the U.S. stock market. Understanding their differences helps you appreciate how stocks actually trade. [DEFINITION] Stock Exchange: An organized marketplace where securities (stocks, bonds) are bought and sold under strict regulations. ### The New York Stock Exchange (NYSE) Founded in 1792, the NYSE is the world's largest stock exchange with roots going back to traders meeting under a buttonwood tree on Wall Street. **Key Characteristics:** - **Hybrid market**: Combines electronic trading with human specialists on the trading floor - **Specialists**: Designated Market Makers (DMMs) facilitate orderly trading for specific stocks - **Prestige**: Companies view NYSE listing as a mark of credibility - **Stricter requirements**: Higher financial thresholds for listing [EXAMPLE] When you see footage of traders on a chaotic trading floor making hand signals and shouting orders, that's the NYSE. While most trading is now electronic, the floor remains operational and handles about 10% of NYSE volume. ### NASDAQ: The Electronic Pioneer NASDAQ (National Association of Securities Dealers Automated Quotations) launched in 1971 as the world's first electronic stock market. **Key Characteristics:** - **Fully electronic**: No physical trading floor - **Multiple market makers**: Several firms compete to provide the best prices - **Technology focus**: Attracts many tech companies - **Lower listing fees**: More accessible for smaller companies [TIP] The distinction between NYSE and NASDAQ matters less to everyday investors than it once did. Both exchanges are highly regulated and offer similar protections for investors. ### Major Companies by Exchange **NYSE Blue-Chips:** - Berkshire Hathaway (BRK) - Johnson & Johnson (JNJ) - JPMorgan Chase (JPM) - Walmart (WMT) - Coca-Cola (KO) **NASDAQ Tech Giants:** - Apple (AAPL) - Microsoft (MSFT) - Amazon (AMZN) - Alphabet/Google (GOOGL) - NVIDIA (NVDA) [KEY] Both exchanges are regulated by the SEC (Securities and Exchange Commission) and offer SIPC protection up to $500,000 per account. Your investments are safe regardless of which exchange hosts them. [EXERCISE] If you wanted to buy shares of both Coca-Cola (NYSE) and Apple (NASDAQ), would you need two different brokerage accounts? |ANSWER| No! Any standard brokerage account can buy stocks from either exchange. Your broker routes orders to the appropriate exchange automatically. [WARNING] Some companies intentionally choose certain exchanges for marketing purposes. A NASDAQ listing doesn't automatically mean a company is tech-focused, just as NYSE listing doesn't guarantee stability. Always research the company itself.