The two main stock exchanges: NYSE and NASDAQ, and why invest

The stock exchange is a regulated financial market, where securities and currencies are traded. The three types of financial products that are traded on the stock exchange are stocks, bonds and derivatives

by Lorenzo Ciotti
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The two main stock exchanges: NYSE and NASDAQ, and why invest
© Mario Tama / Staff Getty Images News

The stock exchange is a regulated financial market, where securities and currencies are traded. The three types of financial products that are traded on the stock exchange are stocks, bonds and derivatives. The stock exchange is a secondary market, as financial instruments are traded that have already been issued and therefore already in circulation when the company was not yet listed.

The stock exchange is also a regulated and official market, since all trading operations and their methods, operators and permitted contractual types are specifically regulated there.

Listed companies can withdraw from the stock exchange through delisting, while unlisted companies can enter if they meet certain parameters, for example having a certain amount of share capital.

The task of the stock exchange is to receive trading orders from operators and execute them, following the law of supply and demand. The work of traders is called trading, meaning the exchange of a financial instrument for cash.

Trading activity is heavily regulated, with criminal and/or administrative sanctions defined in almost all jurisdictions.

NYSE Euronext was a global group of stock markets created in 2007 from the merger between the New York Stock Exchange (NYSE) and the Euronext group of European stock exchanges.

The NYSE Euronext was, until its dissolution, the world's main stock market. Euronext is one of the main stock exchanges in Europe, created from the merger of the stock exchanges of Paris, Amsterdam, Brussels, Lisbon and LIFFE (London International Financial Futures and Options Exchange, which later became ICE Futures Europe).

NYSE completed its acquisition of Archipelago Holdings through a double dummy on March 7, 2006 for $10 billion to create NYSE Group. NYSE Group merged with Euronext on April 4, 2007. The NYSE Euronext group has been purchased by IntercontinentalExchange, which has announced its intention to spin off and put the European part Euronext up for sale.

NASDAQ is the first example in the world of an electronic stock market, a market made up of a computer network. The headquarters is located in Times Square. The NASDAQ is essentially the index of the main technology stocks on the American stock exchange; there are also listed companies from multiple sectors, including IT companies such as Microsoft, Cisco Systems, IBM, Apple, Google, Yahoo, Facebook and Amazon.

The performance of the NASDAQ is measured by various indices, mainly including the NASDAQ Composite Index and the NASDAQ-100.§

The new stock exchange group was established in New York on 5 February 1971. At the beginning of the third millennium the Nasdaq was characterized by strong volatility, due to the boom of the so-called New Economy.

The index, after starting on 8 February 1971 with an initial value of 100 points, reached an all-time high of 5132 points on 10 March 2000, in the midst of the New Economy boom before the subsequent bursting of the dot-com bubble, which brought the index back close to 1000 points.

In the following years there was first a stabilization and then a rise, which led the index to exceed 10,000 during 2020. The highest peak ever reached was reached on December 21, 2021 when it reached 16,459 points.

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