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For example it seems technology stocks are typically listed on the NASDAQ while traditional industry may be listed on NYSE.

Are there any advantages to one over the other or is it just "tradition"?

Would the choice of exchange make any difference to typical individual investors wishing to buy the stock?

As a majority owner of a company what advantages would be to listing my company on one vs the other?

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    How is it related to Personal Finance ?
    – DumbCoder
    Aug 30, 2016 at 13:24
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    @DumbCoder it's possible that it could affect ones perception of the quality of one investment over another.
    – homer150mw
    Aug 30, 2016 at 13:32
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    The mantra of this community "Q&A for people who want to be financially literate" not just questions only related to your own personal finance. Thanks for the contribution though.
    – jterm
    Aug 30, 2016 at 13:33
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    There -- now it's on topic.
    – Chris W. Rea
    Aug 30, 2016 at 16:39
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    @jterm Look at the listing requirements for each exchange, that should give you a solid idea.. for example the NYSE is highly sought to be listed on because it requires companies to be at least $100M in value pre-IPO among other things which is a sign of a healthy company. Compared to the pink sheets or OTC which almost has no requirements in valuation or regulations. However NASDAQ is the biggest.
    – NuWin
    Aug 30, 2016 at 17:13

1 Answer 1

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Listing on NYSE has more associated overhead costs than listing on NASDAQ. In the case of young technology companies, this makes NASDAQ a more attractive option.

Perhaps the most important factor is that NYSE requires that a company has an independent compensation committee and an independent nominating committee while NASDAQ requires only that executive compensation and nominating decisions are made by a majority of independent directors. No self-respecting, would-be-instant-billionare tech entreprenuer is going to want some independent committee lording it over their pay packet.

Additionally, listing on NYSE requires a company have stated guidance for corporate governance while NASDAQ imposes no such requirement. Similarly, NYSE requires a company have an internal audit team while NASDAQ imposes no such requirement.

Fees on NYSE are also a bit higher than NASDAQ, but the difference is not significant.

A good rundown of the pros/cons: http://www.investopedia.com/ask/answers/062215/what-are-advantages-and-disadvantages-listing-nasdaq-versus-other-stock-exchanges.asp

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  • Does NYSE still have market makers (assuring liquidity) or is that a historical differentiation between the exchanges?
    – user662852
    Aug 30, 2016 at 17:33
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    @user662852 If my memory serves me well, I believe that NYSE has what are called "Specialists". They serve the same function as a market maker. Also, I believe there are many more market makers working NASDAQ and that the NYSE market making functions are much more concentrated in the hands of a small number (less that a dozen) of specialists.
    – not-nick
    Aug 30, 2016 at 17:39
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    @user662852 The listing venue has no bearing on whether there are Registered Market Makers, because each exchange that trades the stock has its own rules about market makers, and every exchange trades every public stock regardless of where it is listed.
    – dg99
    Aug 30, 2016 at 22:34
  • This explains why a tech company would prefer the NASDAQ, but doesn't explain why any other company would prefer NYSE.
    – Paul
    Aug 31, 2016 at 16:54
  • @Paulpro Good point. One can infer from the more demanding listing requirements of the NYSE that those companies who choose the NYSE present a more credible and safe investment opportunity to investors by having clearly stated governance, internal auditing, and stronger oversight of executive pay. This presents a more comforting picture to certain types of investors.
    – not-nick
    Aug 31, 2016 at 18:14

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