NYSE Or NASDAQ? Here's Why Stocks Get Listed

Practically all investors are aware of the two leading exchanges that host much of the stock trading in the world — NASDAQ and NYSE – but that’s about it.
Most investors have no idea how they work, how they came to be or each exchange's benefits and drawbacks.

What Happened: First, some history, starting with the 230-year-old New York Stock Exchange, also known as the NYSE.

In March 1792, 24 of New York's most significant merchants convened in secret to address the young country's first financial crisis. Two months later on May 17, 1792, the men signed the Buttonwood Agreement, a contract that would bring order to securities trading.

The NASDAQ, or the National Association of Securities Dealers Automated Quotations Stock Exchange, was founded on Feb. 8, 1971, and was the first electronic stock market in the world. It started as merely a quotation system, with no ability to execute trades electronically.

The NYSE had a certain cachet, and it was known to be appealing to blue-chip businesses or companies with a significant market capitalization, as well as being less volatile. On the other hand, the NASDAQ was recognized for hosting smaller start-ups and technology companies.

The prestige of listing on the NYSE has waned somewhat as mega-cap companies such as Alphabet, Tesla and Apple are traded on the NASDAQ.

The primary distinctions between the two exchanges include how buyers and sellers transact securities and the costs associated with maintaining public listings.

The NYSE is a dealer market, whereas the NASDAQ is an auction market. The auction approach allows investors to buy and sell directly from one another, allowing for simultaneous competing bids. On the other hand, the dealer market means that investors do not purchase and sell directly from one another but rather through a market maker.

IPO and annual listing fees are significantly lower on the NASDAQ than on the NYSE.

IPO:
NYSE: $295,000
NASDAQ: $150,000

Annual Fees:
NYSE: $71,000
NASDAQ: $47,000

Currently, there are 2,800 companies listed on the NYSE and 3,300 companies listed on the NASDAQ.