NYSE · auction market, trading floor, listing since 1817 NASDAQ · the largest electronic stock market in the US, since 1971 LISTING REQUIREMENT · the standards a company must meet to trade on an exchange IPO · a company's first sale of stock to the public BLUE CHIP · a large, well-regarded company with a long record of profits NYSE · auction market, trading floor, listing since 1817 NASDAQ · the largest electronic stock market in the US, since 1971 LISTING REQUIREMENT · the standards a company must meet to trade on an exchange IPO · a company's first sale of stock to the public BLUE CHIP · a large, well-regarded company with a long record of profits
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Stock Market Investing · A Self-Guided Course
SESSION 10

What Is an Exchange?

Every stock you buy in the Stock Market Game trades on one of two places: the NYSE or the NASDAQ. This session covers what an exchange actually is, how a company earns the right to list on one, and why companies sometimes switch.

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Background

Two Places to Trade

In the Stock Market Game, students buy and sell stocks and mutual funds listed on the New York Stock Exchange (NYSE) and the NASDAQ. Each exchange has its own standards a company must meet to be listed. Once listed, companies must maintain the exchange's listing requirements and abide by its rules. Stocks are represented on the exchanges by ticker symbols.

The NYSE

The NYSE uses an auction platform, buying and selling historically took place on a physical trading floor. The NYSE merged with Archipelago, an electronic market platform, to form NYSE Group, Inc. (announced 2005, completed in March 2006). The following year, NYSE Group merged with Euronext N.V. to form NYSE Euronext, bringing together major markets across Europe and the US (completed April 2007). In 2013, NYSE Euronext became a subsidiary of Intercontinental Exchange (ICE), creating one of the largest networks of regulated exchanges and clearing houses in the world.

The NASDAQ

The NASDAQ is the largest electronic stock market in the US. When it began trading in 1971, it was the world's first electronic marketplace, transactions take place on a virtual platform, with investors at remote locations all over the world buying and selling shares. In 1992, when it joined with the London Stock Exchange, it became the first intercontinental linkage of securities markets. NASDAQ is itself a publicly traded company, trading as the Nasdaq OMX Group under the symbol NDAQ.

Key Terms

Vocabulary

Tap a card to flip it and reveal the definition.

Auction Market
Auction market trading, sometimes called open outcry, is the way major exchanges like the NYSE and the Chicago Mercantile Exchange have traditionally handled buying and selling.
Brokers
Acting for buyers, brokers compete against each other on the exchange floor, as brokers acting for sellers do, to get the best price. Trading can be intense but stays orderly because participants follow exchange rules.
Bid Price
The price a market maker or broker offers to pay for a security.
Blue Chip Stock
The common stock of a large, well-regarded US company. Blue chips have a long-established record of earning profits and paying dividends regardless of the economic climate.
Initial Public Offering (IPO)
When a company reaches a certain stage of growth, it may decide to go public. Any company planning an IPO must register with the SEC, usually working with an investment bank that underwrites the offering.
Large Cap
Stock of companies with market capitalizations typically of $10 billion or more. Generally considered less volatile than smaller companies, though market cap is always in flux.
Listing Requirement
The standards a corporation must meet to have its stock or bonds traded on a particular exchange, including pretax earnings, minimum market value, and a minimum number of existing shares.
Market Capitalization
The market value of a company's stock.
Mid Cap Stock
Stock of a corporation with market capitalization between $2 billion and $10 billion. Investors tend to buy mid caps for growth potential, at prices typically lower than large caps.
Small Cap Stock
Shares of relatively small public companies, typically under $2.3 billion in market cap (some define it as under $1.5 billion). Tend to be young, potentially fast-growing companies.
Stock
An equity investment representing part ownership in a corporation. Common stock gives voting rights but no guaranteed dividend; preferred stock gives no voting rights but usually guarantees a dividend.
Stock Exchange
Where brokers gather to buy and sell stocks and other securities. The term also covers electronic trading over computer and telephone lines, since most trading today is handled electronically.
Shareholder
If you own stock in a corporation, you are a shareholder of that corporation.
Goals

Performance Objectives

By the end of this session, you will be able to:

Materials & Resources

What You'll Need

Resources that can serve as a starting point for research:

Springboard Activity

Shoes and Stocks

Who in the class has ever gone shopping at a mall? Where would they buy shoes there?
What shoes do you think are most popular? Where would you buy the most popular shoes? Would you buy them at a general department store, or would you have to go to a specialty shoe store?
Malls organize shoe stores in different ways. Shoe stores are set up to sell the type of shoe different buyers want, the most popular sneakers, dress shoes for a wedding, sandals for summer, cleats for soccer. Depending on what type of shoe you wanted, you might have to go to a different type of store.

The stock exchanges work the same way. They give you a lot of choices. In the Stock Market Game you have two stores, NASDAQ and the NYSE, from which to choose stocks. Just like malls give you places to buy different kinds of shoes, stock exchanges give buyers and sellers the opportunity to trade the stocks of different types of companies.

All companies must satisfy certain requirements to be listed on a particular exchange. If a company meets an exchange's requirements, it can be listed, meaning its shares can be bought and sold there. If a company's stock later fails to meet those requirements, the exchange may delist it, and the stock is no longer traded there. The reason a company's stock trades on one exchange and not another has a lot to do with the company's size, its size and history can tell an investor something about the stock itself.

Activity Sheet 1 · Novice Level

The NASDAQ and NYSE

Complete the table below, then discuss: what do you think makes a company choose one exchange over another? Does the exchange a company is listed on impact its stock performance? Is where a company is listed important to you when researching a stock?

NASDAQNYSE
Company NameThe Nasdaq OMX Group, Inc.Subsidiary of the Intercontinental Exchange Group, Inc.
TickerNDAQICE
Homepagenasdaq.comnyse.com
Founded19711817
Current Stock Price$95.44 (NDAQ, Aug 7, 2026)$150.30 (ICE, Aug 7, 2026)
DescriptionAn all-electronic trading platform that has historically listed many technology-based companies, some of which did not qualify to list on the NYSE when they first went public.Historically a hybrid auction/electronic market, traditionally home to some of the biggest public companies in the world.
Listing Standards (Pre-Tax Income)Aggregate in the prior three fiscal years greater than $11 million, with at least $2.2 million in each of the two most recent years (Global Select Market earnings test)Aggregate in the prior three fiscal years of at least $10 million, with at least $2 million in each of the two most recent years (standard earnings test)
Listing FeesInitial entry fee of roughly $350,000 for the Global Select Market, including a $25,000 application feeInitial listing fee of $325,000 plus a $25,000 application fee, roughly $350,000 total
Total Number of CompaniesApproximately 3,450 (2026)Approximately 2,200 (2026)
Three Listed Companies1. Apple Inc. (AAPL)   2. Microsoft Corporation (MSFT)   3. Amazon.com, Inc. (AMZN)1. Berkshire Hathaway Inc. (BRK.B)   2. JPMorgan Chase & Co. (JPM)   3. Exxon Mobil Corporation (XOM)
Apprentice Level

Fact Sheets: Companies Switching Exchanges

Read the summaries below (each drawn from a real news article about a company moving between exchanges), then discuss the questions that follow.

Fact Sheet 1

"Analysis: Twitter gives NYSE momentum in IPO battle versus Nasdaq"

Reuters, by John McCrank, Nov 9, 2013

Twitter's successful 2013 debut on the NYSE helped the exchange pull ahead of Nasdaq for tech listings that year, 19 to 14, after Nasdaq's high-profile mishandling of Facebook's 2012 IPO had already dented its reputation. The article traces Nasdaq's long dominance in tech listings back to the 1990s, and notes that both exchanges use different methods for counting what counts as a "tech" IPO, which produces different tallies for the same year.

Fact Sheet 2

"Oracle Ditches Nasdaq for NYSE"

The Wall Street Journal, by Jacob Bunge, June 20, 2013 · NYSE Euronext's own announcement of the same transfer

Oracle announced it would move its listing from Nasdaq to the NYSE, at the time the largest-ever transfer between the two exchanges given Oracle's market value. The move followed a string of prestige battles between the exchanges over other big-name listings, and the article notes that exchanges compete hard for these listings because they bring both listing fees and ongoing trading revenue.

Fact Sheet 3

"Marriott Plans to Transfer Stock Listing to Nasdaq"

Bloomberg, by Alex Barinka and Sam Mamudi, Oct 7, 2013

Marriott International announced it would move from the NYSE to Nasdaq, citing cost considerations and access to Nasdaq's investor-outreach tools. The article notes Nasdaq's Times Square billboard as a draw for consumer-facing companies like Marriott, and comes just months after Oracle's high-profile move in the opposite direction.

Q1
How much of a role do you believe Nasdaq's handling of Facebook's IPO played in Twitter's decision to list with the NYSE? Why?
Q2
Imagine you are the head of a technology company preparing to go public. Based on Fact Sheet 1, where would you choose to list? Why?
Q3
How do the exchanges differ in the ways they determine trading requirements for individual shares of an IPO?
Master & Grand Master Level

Taking the Crown

Read Fact Sheets 2 and 3 above if you haven't already.

Give your opinion, in teams or individually, of this November 7, 2013 CNN Money headline: "NYSE Takes Tech IPO Crown from NASDAQ." Do you agree with the headline? Citing specifics from the Fact Sheets, how might Nasdaq retake the crown from the NYSE? What should the NYSE do to retain it?
Assessment

Write to Marriott's Board

Citing the Fact Sheets and additional research, write a letter to Marriott's Board of Directors to convince them to list on the NYSE again. Be sure to address the reasons Marriott gave in Fact Sheet 3 for leaving in the first place.

A structure to build your letter around

  • Open by acknowledging Marriott's stated reasons for the move: cost, and access to investor-outreach tools.
  • Address the cost point directly. Is Nasdaq's listing fee actually lower once you account for other costs? What does the NYSE offer that might offset the difference?
  • Make the case for NYSE's own strengths, its prestige with major consumer and hospitality brands, and anything you find in your own research about its investor tools or marketing support.
  • Close with a clear, specific ask: what you want the Board to do, and by when.
Application

Where Are Your Stocks Listed?

Novice & Apprentice

You can purchase stock in companies traded on both the NASDAQ and NYSE. Look up the names of the ten companies you are considering, or have already purchased, and note the exchange each is traded on.

CompanyExchange
Which exchange seems to be most popular in your portfolio? Why?
Master & Grand Master

List the stocks you have already purchased, organized by the exchange they are traded on. Find the date each was listed on that exchange. Research each exchange to find information on its latest IPO.

In which IPO would you invest? Why?
Enrichment Activities

Pitching Your Company to an Exchange

Imagine you are the head of a growing company preparing an IPO. Visit the homepages of the major US exchanges and find each one's "Corporate Products and Services" section, which describes what a company receives when it lists there. Which exchange would you list on? Why?

Prepare a table comparing the products and services of the exchanges you researched, including why you believe each product or service would be beneficial to your company.

Product / ServiceExchangeWhy It Would Help Your Company