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NYSE vs NASDAQ: Similarities, Differences and Listing Requirements

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There is always confusion among new investors about NYSE vs NASDAQ. They both are stock exchange platforms and have differences in their working principles and listing requirements. In this article, we will talk about NYSE vs NASDAQ in detail.

Table of Contents

New York Stock Exchange (NYSE) Overview

NYSE (New York Stock Exchange) is a US-based stock exchange where SPACs, ETFs (Exchange Traded Funds), mutual funds, and other cash entities are listed for trading. As more than 2800 companies are listed on NYSE such as Alibaba Group Holding, Berkshire Hathaway, VISA, Johnson and Johnson, Walmart, etc. it is the biggest stock exchange company based on market capitalization. The term market capitalization can simply be defined as the total no. of shares multiplied by the market price. NYSE has a long history as it all started on May 17, 1992, when 24 stockbrokers signed an agreement called Buttonwood Agreement at 68 Wall Street. This agreement kicked off an official stock exchange and started an American investment community also popular by the name “Wall Street”. 

The American Stock Exchange, originally called “curbstone brokers”, the ancestors of the Amex market were tough and independent. They used to invest in small companies and emerging industries. This helped a large segment of corporations to grow faster. Since then Amex has been at the forefront of the U.S financial and stock market. Finally in October 2008 when NYSE Euronext merged with American Stock Exchange for $260 million in stock, it became the world’s largest Stock Exchange Company. As of September 2021, NYSE sits on top with a market capitalization of over 28.4 trillion U.S dollars.

NASDAQ Overview

NASDAQ acronym for the “National Association of Securities Dealers Automated Quotations” is also a US-based Stock Exchange. Biggest tech giants like Alphabet (Google), Meta (Facebook), Apple, Microsoft, Amazon, etc are listed in Nasdaq making Nasdaq the second biggest stock exchange company based on market capitalization just after NYSE. Originally founded by the National Association of Securities Dealers (NASD) in 1971, hence the name Nasdaq. NASD which is currently recognized as Financial Industry Regulatory Authority (FINRA) writes and enforces new rules for brokers and market makers. Nasdaq was the world’s first electronic stock market and also the first stock market to trade online through a website.

In 2001, “European Association of Securities Dealers Automated Quotation System (NASDAQ)” and NASDAQ were merged and became NASDAQ Europe. Till now Nasdaq has more than 3500 companies listed for trading. In 2020, just by listing companies and their revenues, Nasdaq earned a whopping $5.627B which is a 32% increase from 2019. As of 2021, Nasdaq has a market capitalization of over 19.4 trillion U.S dollars with which it is just behind NYSE.

NYSE vs NASDAQ Trading Schedule:

As both NYSE and NASDAQ are U.S based Stock Exchange, their trading schedule looks quite similar. For NYSE American the pre-opening session starts at 6:30 am ET (Eastern Time). Pre-orders can be placed and will be queued until the Early Open Auction session that starts from 7:00 am to 9:30 am ET. Finally, the core trading session starts at 9:30 am to 4:00 pm ET, where 3:50 pm to 4:00pm is generally the closing Auction Imbalance Freeze Period. The Auction closes at 4:00 pm ET. As for trading days, NYSE trades 5 days a week i.e. from Monday to Friday, and may not trade if it’s a public holiday.

For NASDAQ the extended-hours trading session (premarket) starts from 7:00 am to 9:30 am ET. The core trading session starts from 9:30 am to 4:00 pm ET. The market closes at 4:00pm. Finally, from 4:00 pm to 8:00 pm is an extended-hours trading session (post-market). As for trading days, NASDAQ trades 5 days a week i.e. from Monday to Friday, and may not trade if it’s a public holiday.

Auction Market and Dealer Market:

New York Stock Exchange (NYSE) is based on the Auction Market. So what exactly is an auction market? Well, an auction market is a type of market where the sellers and buyers directly can trade by themselves. That means the price per share is determined by the lowest price the seller is willing to take and the maximum price the buyer is willing to pay. These two parameters are called offer and bid respectively. So when the bid by the buyer matches the offer provided by the seller the exchange will be executed. The point to notice here is that the auction market trades directly between a seller and a buyer where both would call out prices on the trading floor. If the bid and offer do not match then the order will remain pending unless a matching bid comes by.

NASDAQ is based on the dealer market. In the dealer market, the seller and buyer cannot trade directly with each other but needs to go through the middleman normally called “market makers”. These market makers buy and sell the stocks (securities) between seller and buyers, and gain a certain percentage of profit from overall capital. These market makers help improve the market liquidity as these firms quickly buy and sell those securities without causing any drastic change in the share price.

NYSE vs NASDAQ Listing Requirements

There are multiple listing requirements for both NASDAQ and NYSE. Most of the public companies nowadays list on NASDAQ as the listing cost for NASDAQ is only $50,000 to $75,000 with a yearly renewal cost of around $27,000. While for NYSE, the listing cost can go as high as $500,000 U.S dollars which is comparatively very high than NASDAQ. Other listing criteria are the number of shares available for the public to trade, minimum market price per stock, total market cap, etc.  

For NASDAQ, the listing company must have a minimum of 1,250,000 total outstandings for the public to trade. Whereas, for NYSE the listing company must have a minimum of  1,100,000 total outstandings and at least 400 shareholders. The minimum share price for NYSE-listed companies is $4 with a minimum market cap of 40 million U.S dollars. As NASDAQ is based on the dealer market, so for a company to be listed on NASDAQ must have at least 3 market makers for the trading of their stocks.

The same requirement goes for Special Purpose Acquisition Companies (SPACs) for listing on NYSE and NASDAQ. Besides, the requirements also include that 90% of the capital generated from the IPO must be held in a trust account and that after the business combination the market value must be equal to at least 80% of the net capital held in trust. The SPAC merger must be approved by a majority of the public and if not these stock exchanges can suspend and delist the securities of those SPAC prior to the business combination.

Although the company might meet initial listing requirements, it does not mean that the company will be approved for listing. Nasdaq or NYSE may deny the listing and put additional listing criteria.

To be listed on NYSE, the listing company should meet one of the following financial standards:

Financial Requirements for NYSE

Financial Standards I: Earnings Test Rule 102.01C(I) II: Global Market Capitalization Test Rule 102.01C(II) Real Estate Investment Trusts8 Rule 102.05 Closed-end Management Investment Companies Rule 102.04A Business Development Companies Rule 102.04B
Adjusted Pre-tax Income Aggregate for last 3 fiscal years should be >= $10 mm1,2; Each of the 2 most recent fiscal years >=$2 mm; Each of the prior 3 fiscal years >$0
Global Market Capitalization $200 mm $75 mm
Shareholders’ Equity $60 mm
Market Value of Publicly Held Shares See chart below See chart below See chart below $60 mm $60 mm

To be listed on NYSE, the listing company should meet all of the following distribution standards:

Distribution Requirements for NYSE

Distribution Standards Rule 102.01A-B IPOs, Spin-offs, Carve-outs Transfer or Quotation All other listings
Shareholders 400 round lot 400 round lot or 2,200 total or 500 total 400 round lot
Publicly Held Shares 1.1 mm 1.1 mm 1.1 mm
Market Value of Publicly Held Shares $40 mm $100 mm $100 mm
Minimum Share Price $4.00 $4.00 $4.00
Average Monthly Trading Volume (Shares) 100,000

Check out the full NYSE Listing Requirements here.

All the Companies to be listed in NASDAQ must meet all of the criteria and at least one of the four financial standards below:

Financial Requirements for NASDAQ

Financial Requirements Earnings Capitalization with Cash Flow Capitalization with Revenue Assets with Equity
Pre-Tax Earnings (revenue from continuing operations before income taxes) Aggregate in prior 3 fiscal years should be > $11 M and Each of the prior 3 fiscal years > $0 and Each of the 2 most recent fiscal years should be > $2.2 million
Cash Flows Aggregate in prior 3 fiscal years should be > $27.5 M and Each of the prior 3 fiscal years > $0
Market Capitalization Average > $550 million over prior 12 months Average > $850 million over prior 12 months $160 million
Revenue Previous fiscal year > $110 million Previous fiscal year > $90 million
Total Assets $80 million
Stockholders’ Equity $55 million
Bid Price $4 $4 $4 $4

Check out the full NASDAQ Listing Requirements here.

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