Premium Stock Exchanges: NYSE and NASDAQ
NYSE and NASDAQ are the premium stock exchanges in the United States. They accounts for most of the trading relating to equities in North America and international market. The two exchange centers share the same platform as far as stock market is concerned with the main difference being in their mode of operation. New York Stock Exchange (NYSE) uses designated specialists who handle stocks for the clients and provide assistance incase something goes wrong. National Association of Securities Dealers Automated Quotations (NASDAQ) is quite different since it is totally automated. NASDAQ has built its image as an exchange that has successfully succeeded through use of technology. It is actually the second largest exchange center in the world, second to NYSE which has maintained human backstop (Oniak, Cohen & David, 2010).
NASDAQ and the NYSE operations are quite different because trade using different types of equity but they still have multiple similarities. The two organizations have established a well known trading sector not only in the United States but also in the global business. This is because they both offer high-end services to their clients. The two exchange centers share the same strength of having a well established exchange of equities between those buying and those selling stocks. Other major similarities between the two exchange centers, is that they are public trading organizations and also they are highly demanded in the stock exchange market. Even so, NYSE and NASDAQ have major differences especially in the principles relating to operations..
NASDAQ’s components are mainly technology, electronics and internet based organizations, and that explains why the exchange center is regarded as high technology market. NYSE on the other hand, components are older and established companies who operate in a vast industry. The systems on how each of these centers handle the exchange market is quite different. NYSE handles its operations on a physical trading manner, whereby representative of the companies meet and exchange on a typical market. While on the contrary, NASDAQ’s mode of operation is purely telecommunication network based. This means that physical trading is not done, rather, a direct contact system that uses the internet and advanced technology facilitates communication between the sellers and the buyers.
The cost required to invest in the two exchange centers is also different. Before investing in NASDAQ a yearly fee of $60,000 is required. NASDAQ also state the highest listing cost to be $150,000 while the NYSE states the highest listing cost to be $250,000 and an annual fee of $500,000(Floyd & Adam, 2010). This means that NASDAQ is less costly when dealing with frequent investments. The Volatility aspect of the two large exchange centers is also quite different. According to Madura (2011), volatility is the amount of returns that an investor should expect as returns after an investment. Volatility is highly dictated by the ups and downs of the security price. When the volatility is low then the returns are also low. NASDAQ stocks are regarded to have higher volatility to those of the NYSE. Other differences regarding NASDAQ and NYSE are on the strict rules of NYSE listing and the NYSE trades on a double auction market while the NASDAQ trades on an online market.
The Public company Accounting and Investor Protection Act of 2002 tend to monitor and the operations and accuracy of the two exchange centers NASDAQ and NYSE. The act assists in the management and certification on the accuracy of the financial information. It also assists in providing justice through acting as reference incases of fraudulent financial activity. With the help of external auditors the act assist maintains accuracy of corporate financial statements as well as providing additional oversight duty of boards of directors.
Floyd, N. & Adam, L (2010). Supreme Court Upholds Accounting Board. The New York Times.
Madura, J. (2011) International Financial Management: Cengage Learning
New York Stock Exchange (NYSE) Retrieved from ttps://nyse.nyx.com
National Association of Securities Dealers Automated Quotations (NASDAQ) Retrieved from http://www.nasdaq.com/
Oniak, P., Cohen, M. & David A. (2010). How Washington Abetted the Bank Job, New York Times