When you buy a stock, that trade happens on a stock exchange. But what exactly is an exchange, and why does it matter which one your stock trades on? Let us explore the major stock exchanges and how they work.
What is a Stock Exchange?
A stock exchange is an organized marketplace where stocks are bought and sold. Think of it as a highly regulated auction house that matches buyers and sellers. Exchanges ensure fair prices, prevent fraud, and create a trusted environment for trading.
Key point: Companies must meet strict requirements to be listed on an exchange. This includes financial reporting, minimum share prices, and corporate governance standards. Being listed on a major exchange adds credibility to a company.
The New York Stock Exchange (NYSE)
The NYSE is the largest stock exchange in the world by total market capitalization of listed companies. Founded in 1792, it has a rich history and is located at 11 Wall Street in New York City.
Key facts about the NYSE:
- Lists over 2,800 companies
- Total market cap of listed companies exceeds $25 trillion
- Known for blue-chip companies and established businesses
- Still maintains a physical trading floor with human traders
- Famous for its opening and closing bells
Notable NYSE companies: Coca-Cola, Johnson & Johnson, Disney, Walmart, JPMorgan Chase, Visa, and Berkshire Hathaway.
NASDAQ
NASDAQ (National Association of Securities Dealers Automated Quotations) launched in 1971 as the world's first electronic stock exchange. It has no physical trading floor and all trades happen electronically.
Key facts about NASDAQ:
- Lists over 3,300 companies
- Known for technology and growth companies
- Fully electronic trading since its founding
- Generally has lower listing fees than NYSE
- Home to many of the world's most valuable tech companies
Notable NASDAQ companies: Apple, Microsoft, Amazon, Google (Alphabet), Meta, Tesla, and Netflix.
NYSE vs NASDAQ: Key Differences
While both exchanges serve the same basic purpose, they have important differences:
Trading mechanism:
- NYSE uses a hybrid model with designated market makers on a physical floor
- NASDAQ is fully electronic with multiple market makers competing
Company types:
- NYSE traditionally attracts established, blue-chip companies
- NASDAQ tends to attract technology and growth-oriented companies
Listing requirements:
- NYSE has stricter initial listing requirements
- NASDAQ has multiple tiers with varying requirements
Does the Exchange Matter to You?
For most individual investors, which exchange a stock trades on makes little practical difference. You can buy NYSE and NASDAQ stocks through the same brokerage account. The main differences affect the companies themselves in terms of listing fees and requirements.
Other US Exchanges and Trading Venues
Beyond the two major exchanges, stocks also trade on other venues:
NYSE American (formerly AMEX)
Focused on smaller companies and ETFs. Has lower listing requirements than the main NYSE.
CBOE (Chicago Board Options Exchange)
While primarily known for options trading, CBOE also operates stock exchanges including CBOE BZX and CBOE EDGX.
IEX (Investors Exchange)
A newer exchange designed to reduce advantages of high-frequency trading. Uses a "speed bump" to level the playing field.
OTC Markets
Over-the-counter markets trade stocks not listed on major exchanges. These include smaller companies, penny stocks, and foreign companies. OTC stocks are generally riskier and less liquid.
Major Global Stock Exchanges
Stock exchanges exist around the world. Here are some of the largest:
London Stock Exchange (LSE)
One of the oldest exchanges, dating back to 1801. Lists European and international companies.
Tokyo Stock Exchange (TSE)
The largest exchange in Asia by market cap. Lists major Japanese companies like Toyota and Sony.
Shanghai Stock Exchange (SSE)
One of two major exchanges in mainland China. Primarily serves domestic Chinese investors.
Hong Kong Stock Exchange (HKEX)
A key gateway for international investors to access Chinese companies.
Euronext
A pan-European exchange operating in Paris, Amsterdam, Brussels, Dublin, Lisbon, Milan, and Oslo.
How Companies Choose an Exchange
When a company decides to go public, it must choose which exchange to list on. Factors include:
- Prestige: NYSE is often seen as more prestigious for established companies
- Cost: NASDAQ typically has lower listing fees
- Industry peers: Companies often list where similar businesses trade
- Services: Different exchanges offer various support services
- Requirements: Companies must meet minimum standards for each exchange
Listing Requirements
To be listed on a major exchange, companies must meet specific requirements:
NYSE requirements (simplified):
- Minimum share price of $4
- At least 400 shareholders
- 1.1 million publicly held shares
- $40 million market value of public shares
- Meet certain earnings or cash flow thresholds
NASDAQ Global Select (top tier) requirements:
- Minimum bid price of $4
- At least 450 shareholders
- 1.25 million publicly held shares
- $45 million market value of publicly held shares
If a company fails to meet continued listing requirements (like minimum share price), it can be delisted from the exchange.
Trading Hours Across Exchanges
Different exchanges have different trading hours based on their time zones:
- NYSE/NASDAQ: 9:30 AM - 4:00 PM Eastern Time
- London: 8:00 AM - 4:30 PM GMT
- Tokyo: 9:00 AM - 3:00 PM JST (with lunch break)
- Hong Kong: 9:30 AM - 4:00 PM HKT (with lunch break)
Because exchanges operate in different time zones, there is almost always a major stock market open somewhere in the world on weekdays.
Track Trades Across All Markets
Pro Trader Dashboard tracks your stocks and options regardless of which exchange they trade on. See all your positions in one place with real-time updates.
Summary
Stock exchanges are organized marketplaces that ensure fair and transparent trading. The NYSE and NASDAQ are the two largest US exchanges, with NYSE known for established companies and NASDAQ for technology firms. For individual investors, the exchange a stock trades on rarely matters for your trading experience, but understanding exchanges helps you understand how markets work.
Ready to learn more? Read our guide on market indexes or learn about market capitalization.