NYSE vs. NASDAQ By Hilary Everist and Jessica Sandoval.

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Presentation transcript:

NYSE vs. NASDAQ By Hilary Everist and Jessica Sandoval

New York Stock Exchange

History Created in 1792 by the Buttonwood Agreement Location gives Wall Street its prominent place in the financial industry Operates 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

History Founded 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 floor NASDAQ is an electronic stock market Efficient, convenient and diversified market participants

Timeline 1994 NASDAQ made history and went beyond NYSE in annual share volume 1998 NASD and the American Stock Exchange (AMEX) merged AMEX: 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 stocks Therefore attracts many technology stocks and on the rise companies

NASDAQ Structure All 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 MarketSite Times Square in New York City Physical presence of NASDAQ Seven 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.

NASDAQ Successfully achieved economies of scale It 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 NYSE Physical Trading Floor Specialist Offers Price Improvement Prestigious “Largest” NASDAQ Virtual Trading Floor Rely on market makers Price as is Listing fees and requirements “Largest”

Conclusion We 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.