Difference Between Nasdaq and NYSE: Key Factors to Know
Understand the key differences between Nasdaq and NYSE, including their structures, trading models, and costs, to make informed investment decisions.
Stock exchanges play a key role in the financial system by providing platforms for companies to raise capital and investors to trade shares. Among the largest and most well-known are the Nasdaq and the New York Stock Exchange (NYSE), both serving as primary marketplaces for publicly traded companies. While they may seem similar, differences in their structure, listing requirements, and trading mechanisms impact how stocks are listed and traded.
Ownership and Organizational Structure
Nasdaq and the NYSE operate under different ownership models. Nasdaq is owned by Nasdaq, Inc., a publicly traded company listed under the ticker symbol NDAQ. The NYSE is owned by Intercontinental Exchange (ICE), a Fortune 500 company that also operates futures and commodities exchanges. ICE acquired the NYSE in 2013, integrating it into a broader portfolio of trading platforms.
These ownership structures influence revenue generation. Nasdaq earns money through listing fees, market data sales, and technology services, including licensing its trading software. The NYSE, while also profiting from listing fees and data sales, benefits from ICE’s diversified business model, which includes clearing services and derivatives trading.
Nasdaq operates as a fully electronic marketplace with a decentralized structure, meaning it does not have a physical trading floor. The NYSE, while heavily reliant on electronic trading, maintains a physical presence on Wall Street, where designated market makers (DMMs) help facilitate trading.
Listing Eligibility Standards
Companies looking to go public must meet specific listing requirements, which differ between Nasdaq and the NYSE. Nasdaq has three tiers—Nasdaq Global Select Market, Nasdaq Global Market, and Nasdaq Capital Market—each with different financial and governance criteria. The NYSE, which generally attracts larger corporations, has a single set of requirements with variations based on company size and financial performance.
One key difference is the minimum market capitalization required for listing. Nasdaq’s Capital Market, designed for smaller companies, requires a minimum market value of publicly held shares of $15 million, while its Global Select Market requires at least $110 million. The NYSE mandates a minimum market capitalization of $100 million.
Financial performance thresholds also vary. Nasdaq allows multiple paths to qualification, including revenue-based and income-based standards. A company can qualify with at least $11 million in aggregate pre-tax earnings over the past three years or by meeting specific revenue and asset thresholds. The NYSE generally requires at least $10 million in aggregate pre-tax earnings over the last three years, with at least $2 million in the most recent year and $2 million in the second most recent year.
Share distribution requirements also differ. Nasdaq requires at least 300 round-lot shareholders (investors holding 100 or more shares), while the NYSE sets a higher bar with a minimum of 400. The NYSE also requires at least 1.1 million publicly held shares, whereas Nasdaq’s minimum ranges from 750,000 to 1.25 million, depending on the tier. These differences influence where companies choose to list, as smaller businesses may find Nasdaq’s requirements more accessible.
Trading Models and Mechanisms
Nasdaq and the NYSE have different trading models, shaping how trades are executed. Nasdaq operates as a dealer market, where transactions occur through a network of market makers who provide liquidity by continuously buying and selling shares. These market makers compete to offer the best bid and ask prices. The NYSE functions as an auction market, where buyers and sellers interact directly, with prices determined by supply and demand on the exchange floor.
Market makers play a key role in Nasdaq’s system, maintaining liquidity, especially for stocks with lower trading volumes. These firms, often large financial institutions, must post continuous buy and sell prices, narrowing bid-ask spreads and reducing price volatility. The NYSE employs designated market makers (DMMs) responsible for overseeing trading in specific stocks. Unlike Nasdaq’s market makers, DMMs must maintain fair and orderly markets, stepping in during periods of imbalance to stabilize prices.
Nasdaq’s fully electronic system allows for faster trade execution, often in milliseconds, making it a preferred venue for high-frequency trading (HFT) firms. The NYSE, while also highly automated, incorporates human oversight, which can slow execution slightly but provides additional stability during market volatility.
Technology Infrastructure
Technology infrastructure determines the speed, reliability, and security of trading operations. Nasdaq has built its reputation on electronic trading technology, using its proprietary INET platform to handle high-frequency transactions with microsecond latency. The system processes millions of orders per second, making it attractive to algorithmic traders.
The NYSE operates on a hybrid model that integrates electronic trading with human oversight. Its technology platform, NYSE Pillar, consolidates trading across its equity and options markets. Unlike Nasdaq’s decentralized system, NYSE’s infrastructure allows for greater intervention in volatile conditions, such as through volatility trading pauses and liquidity replenishment points.
Cybersecurity is a priority for both exchanges. Nasdaq employs encryption, artificial intelligence-driven threat detection, and multi-layered authentication to safeguard data. The NYSE, under ICE’s oversight, implements similar measures while ensuring compliance with SEC and CFTC cybersecurity mandates.
Fee and Cost Considerations
The cost of listing and trading on an exchange can influence where businesses choose to list. Listing fees, annual maintenance costs, and transaction charges all contribute to overall expense.
Nasdaq generally offers lower initial listing fees, making it more attractive for smaller or mid-sized companies. Companies listing on Nasdaq’s Capital Market pay between $50,000 and $75,000 in entry fees, while those on the Global Select Market may pay up to $295,000, depending on the number of shares issued. The NYSE, catering to larger corporations, has higher initial costs, with fees starting at $150,000 and reaching up to $500,000 for companies with significant market capitalization. Annual fees also differ, with Nasdaq charging between $48,000 and $167,000, while the NYSE’s range extends from $74,000 to over $500,000 for the largest firms.
Trading fees also vary. Nasdaq operates on a maker-taker pricing model, where liquidity providers (market makers) receive rebates for posting orders, while liquidity takers (traders executing against posted orders) pay fees. This structure incentivizes high-frequency trading and enhances liquidity. The NYSE uses a more traditional fee schedule, with charges based on trade volume and execution type. While both exchanges charge for market data access, Nasdaq’s fees are often lower.
Market Segmentation
The types of companies that list on Nasdaq and the NYSE reflect broader differences in market positioning and investor appeal. While both exchanges host a range of industries, Nasdaq has historically been associated with technology and growth-oriented firms, whereas the NYSE is known for established, blue-chip companies.
Nasdaq’s reputation as a hub for innovation comes from its history of attracting companies in sectors such as software, biotechnology, and e-commerce. Major tech firms like Apple, Microsoft, and Amazon chose Nasdaq due to its electronic trading model and lower listing costs. The exchange’s appeal to high-growth firms is reinforced by its flexible listing requirements, which accommodate companies with strong revenue potential but limited profitability.
The NYSE, by contrast, has traditionally been home to legacy corporations in industries such as finance, energy, and consumer goods. Companies like Coca-Cola, JPMorgan Chase, and ExxonMobil exemplify the exchange’s focus on stability and long-term shareholder value. The NYSE’s prestige and global recognition also make it attractive to multinational firms seeking credibility and investor confidence. Its auction-based trading model, combined with the presence of designated market makers, provides an added layer of price stability, which is particularly beneficial for companies with large institutional investor bases.