How are NYSE and NASDAQ similar? How are the 2 different from each other? Describe in detail the Public Company Accounting & Investor Protection Act of 2002?
NYSE and NASDAQ
NYSE and NASDAQ have some similarities such as both are involved with equity exchanges and also attempts to match supply with demand. Additionally, individuals that control trades in both these stock exchanges have similar roles in certain instances (Heckman, 2001). At the same time, there are also some differences between NYSE and Nasdaq. Companies that are listed on the NASDAQ are considered as more volatile and growth oriented because share prices can rise or fall sharply. On the other side, NYSE listed companies are more stable.
NYSE is a central agency-auction market where more than 80% of the stocks volume is executed on the floor. It is the reason that buyer directly transact with a seller. In contrast, Nasdaq is a decentralized exchange where dealers (also known as market makers) fill a much greater portion of the orders (Brigham & Houston, 2009). The person, who is responsible for controlling the trades at NYSE, is known as specialist while such person at Nasdaq is known as market-maker. In addition to this, NASDAQ stock's investors are also less likely to do better than the quoted bid or ask, as dealers capture the spread as profits. On the other side, either the buyer, the seller or both perform better than the quoted spread at NYSE.
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The expert explains the similarities and differences between NYSE and NASDAQ.