The US - widely regarded as the world’s financial capital - is home to the world’s two largest stock exchanges by market capitalisation; the New York Stock Exchange (NYSE) and the Nasdaq. But just how large are these two behemoths on the world stage? In 2023, the global stock market was valued at US$109 trillion, of which nearly half, or 42.5%, was accounted for by US equity market exchanges.

So what is the NYSE, how does it work, and what is the difference between Nasdaq and NYSE? We delve into the answers below.

What is the NYSE?

The NYSE, is the world’s largest stock exchange by market cap, and what the NYSE stands for is The New York Stock Exchange. In July 2023 it listed public companies with a combined market cap of nearly US$25 trillion, accounting for almost one-quarter of the world’s total share value! This eclipses the New Zealand Stock Exchange (NZX) that in 2023 had a combined market cap of around US$132 billion, which equates to a tiny 0.5% of the value of the NYSE.

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How does the NYSE work?

The NYSE is one of the few exchanges that still operates using a Trading Floor. This is where stock brokers buy and sell stocks directly with one another in a large area roughly the size of an Olympic swimming pool. While electronic trading exchanges have become more common across the globe, since 2006, the NYSE has used both the NYSE Arca - the NYSE’s electronic exchange formed when the NYSE merged with Archipelago in 2006 - and floor-based trading.

When the COVID pandemic gripped the world in 2020, the NYSE was forced to abandon their Trading Floor posts between 23 March and 26 May, and for the first time in history the exchange operated using only electronic trading.

How the NYSE works is through an auction-based supply and demand bid system where traders on the Trading Floor buy and sell securities, much like its New York Stock & Exchange Board origins. In very simple terms, brokers make stock price adjustments based on what people are willing to pay for a security and what to sell it for. Market specialists such as market makers and designated market makers (DMMs) are able to work on both sides of the buying and selling process, which is a practice that aims to ensure stock liquidity and avoid imbalances on either side. The NYSE and the Nasdaq are fundamentally different in their approach to stock trading and in contrast, Nasdaq trades are placed through dealers.

For more detail on the intricacies of the NYSE’s Trading Floor, The Auction Method by Investopedia delivers on detail. To find out where human expertise and technology combine forces in this giant US share market, meet the Ramp.

How many companies are on the NYSE?

The NYSE lists more than 2,300 publicly traded companies across energy, finance, consumer goods, entertainment, property and healthcare. The NYSE is very tightly regulated and companies need to meet rigorous requirements before listing. It’s widely considered to be a prestigious stock exchange because of this, and known for quality blue chip listings. Some of the exchange's most widely-known companies include Bank of America (BAC), AT&T (T), Pfizer (PFE), Exxon Mobil (XOM), Oracle (ORCL), Walmart (WMT), Chevron (CVX) and Visa (V). 

What is the history of the NYSE?

Nicknamed 'the Big Board', New York’s original member-owned stock exchange was called the New York Stock & Exchange Board. Founded in 1817, its beginning dates back a further quarter of a century to 1792 when 24 stockbrokers met under a buttonwood tree on New York City’s Wall Street. They signed what became known as the Buttonwood Agreement, marking the humble beginnings of the Wall Street Financial District.

Going back even further to the 1600s the US Capital Markets were founded by the Dutch, in what was then called New Amsterdam near stockades located in Manhattan at the city’s southern end.

Is the NYSE the oldest stock exchange in the world?

The NYSE doesn’t claim the title of the world’s or even America's oldest stock exchange. The world’s oldest stock exchange is Germany’s Frankfurt Stock Exchange, which was founded more than 400 years ago in 1585. The title of oldest US stock exchange goes to the Philadelphia Stock Exchange (PHLX), founded in 1790, and which today is owned by the Nasdaq, known as the Nasdaq PHLX. 

There’s no doubt though that the NYSE has left its indelible mark on investing, having famously weathered notable events like the Stock Market Crash in 1929 that led to the Great Depression of the 1930s, 1987’s Black Monday, the more recent 2007-2008 Global Financial Crisis (GFC), and the relatively short-lived Coronavirus crash of 2020.

Stock ticker history

The 1-5 characters that denote a company’s stock ‘ticker’ - like Olympic Steel’s punny ZEUS, Ford’s single letter F, footwear-maker Steven Madden’s SHOO and Southwest Airlines’ heartwarming LUV - hails from the New York Stock Exchange’s stock ticker introduced in November 1867. A stock ticker, or ticker tape, was used to make communications more efficient and accurate for traders buying and selling stock across the US by using shortened versions of a company’s name.

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Women on the NYSE trading floors

Historically, women were a rare sight at the New York Stock Exchange. This changed in the First and Second World Wars when many of the clerks operating the tickers and stock exchange boards were women, and later, on the Trading Floor. Close to 50 women, known as ‘the Stock Market Girls’, made a name for themselves on the NYSE floor as pages and reporters during WWII. Following the war, however, women again became a rarity on the trading floor. 

This changed in 1967 when the ‘first woman of finance’, Wall Street broker, women’s rights advocate and philanthropist Muriel Siebert famously became the first female to purchase a seat at the NYSE - which is the only way since 1868 to gain membership on the exchange.

The evolution of trading on the NYSE

Trading on the New York Stock & Exchange Board had humble beginnings at 40 Wall Street in 1817 in a rented room, where traders sat at their member-purchased ‘seat’ shouting buy and sell bid orders at the president who stood at a podium in an auction-like bidding system. As stock numbers increased from 30 to 300, the group moved to 18 Broad Street, where the NYSE’s infamous facade remains as a visual symbol of ‘Wall Street’ and the US Financial District. 

As trading volumes and methods evolved and grew, stock brokers began roaming the floor to make a trade. Further developments included:

• tickers in 1863
• the opening bell to signal the start and close of the day’s continuous trading in 1870 
• phone trading from 1878,
• in 1903, the opening of the exchange’s grand George B. Post-designed Trading Floor (complete with a gilded ceiling) 
• in 1922, the Trading Floor at 11 Wall Street

What is the difference between Nasdaq and NYSE?

The Nasdaq and the New York Stock Exchange are both stock exchanges, but they are not the same. The fundamental differences between the Nasdaq vs NYSE are in how they trade, the companies listed on them, and of course their history. 

While the NYSE can trace its roots back to the 1600s, the Nasdaq was founded centuries later in 1971, and is today the second-largest share market in the US and the world, sitting behind the NYSE. The Nasdaq is an electronic trading exchange (it was the first!) - as opposed to a physical stock exchange with trading floors like the NYSE. 

Looking at the New York Stock exchange vs Nasdaq in terms of listings and trade volume, more than 2,300 companies are listed on the NYSE with 2.4 billion shares traded daily. Compare this to the Nasdaq lists around 3,300 companies, trading around 2 billion shares daily.

Like the Nasdaq (NDAQ), the NYSE is a publicly listed company, trading under parent Intercontinental Exchange (ICE) since March 2006 (the NYSE was acquired by ICE in 2013).

Why do companies choose Nasdaq over NYSE? One reason could be that each has a reputation for listing a certain type of company. The NYSE is known for having many long-established blue chip companies. This includes global brands like Disney (DIS), Coca-Cola (KO), Johnson & Johnson (JNJ), Nike (NKE) and IBM (IBM). In contrast, due to its widespread support of Silicon Valley innovators, the Nasdaq is popular with Big Tech companies and  includes tech giants Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL, GOOG), Amazon (AMZN), Nvidia (NVDA) and Meta (META). 

The Nasdaq-100 index boasts some of the world’s largest companies by market cap, and is on Hatch through Invesco QQQ Trust Series 1 (QQQ) and the Invesco Nasdaq 100 ETF (QQQM). The index is used to track the performance of the Nasdaq exchange as well as the technology sector as a whole. 

Where is the NYSE located?

Just like its foundation document that formed under the boughs of a buttonwood tree on Wall Street, the NYSE is today located at 11 Wall Street in Lower Manhattan in New York City. Nearby is its infamous marble facade building located at 18 Broad Street, which together lie within the city block contained between New Street and Exchange Place in NYC’s Financial District. Historically, the New York Stock Exchange gained an advantage due to its location as the financial and trading port and railway gateway city between the US, Britain, Europe and Africa. 

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NYSE opening and closing

The NYSE is known for its infamous 9.30 am opening bell which rings out across the exchange’s four trading floors. The bell is rung daily (except weekends and holidays), often by a listed company marking a milestone such as an IPO, launching a new fund, or to celebrate an anniversary. Because of market automation, the ringing of the bell today is symbolic, and is regarded as a moment of triumph and celebration for companies that have gone public. 

From a Chinese gong to a brass bell, the ringing sound was introduced to announce and control when the continuous market trading floor was opened and closed, replacing the president’s gavel that previously opened and closed the markets. The first guest to start the bell-ringing tradition was Leonard Ross in 1956, which was his prize for winning a TV quiz where he shared his knowledge of the stock markets.

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What is the NYSE Composite?

The NYSE Index explained

As the name suggests, the NYSE Index, also called the NYSE Composite, tracks the performance of the stocks listed on the New York Stock Exchange. It was first launched in 1966, then relaunched in 2003 using modern index methodology to track performance of the exchange. 

Because the NYSE includes large global companies, the NYSE Composite is highly regarded and is used by the media and finance industry to track how the US markets are performing overall. 

The NYSE Composite contains: 

• Common stocks - that represents an investor’s share ownership of a company
• ADRs (American Depository Receipts) - global companies located outside of the US but listed on US exchanges
• REITs - Real Estate Investment Trusts finance, own or operate real estate, from retail, warehousing to office blocks and apartments

The NYSE Composite does not contain:

• ETFs (exchange traded funds) 
• Shares of limited partnerships, closed-end funds, preferred stocks, derivatives, shares of beneficial interest, or trust units.
• Companies listed on any other market, such as the Nasdaq

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Investors can access companies listed on both the Nasdaq and the NYSE through Hatch. Knowing the characteristics and requirements of each, and how shares are bought and sold on them, may help you decide which exchange suits your investment goals. With any investing, diversifying your portfolio and spreading your money across a range of investments - and stock exchanges - can help reduce exposure to market fluctuations and lower risk.