The New York Stock Exchange (NYSE) and the NASDAQ are the two largest stock exchanges in the world, but they operate differently. The NYSE, founded in 1792, is a traditional, physical exchange with a trading floor where transactions occur in person. It utilizes both floor brokers and a system called the Designated Market Maker (DMM), which ensures financial liquidity in the market.

In contrast, NASDAQ, established in 1971, operates entirely electronically. It employs a Market Maker system, where these entities hold inventories of securities to facilitate trading. This electronic system provides faster transaction speeds, leading many tech-based and growth-oriented companies to list on the NASDAQ.

The listing requirements for these two exchanges also differ. The NYSE has stricter criteria, often necessitating companies to have a higher market capitalization and share price. NASDAQ, while still having robust standards, is more accessible for smaller or newer companies. This accessibility makes NASDAQ an attractive option for tech startups and biotech firms.

Moreover, the fee structures vary. NYSE’s fees are often higher due to its stature and physical trading capabilities, while NASDAQ’s costs are more variable, taking into account the company’s size and type of securities listed.

Stock prices on exchanges are determined by supply and demand dynamics in the market. When more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people want to sell a stock than buy it, the price moves down. The price of each stock is determined at any given moment by the market forces of supply and demand, which themselves are influenced by various factors.

Market participants, including individual investors, institutional investors, and traders, place orders to buy or sell stocks. These orders are processed through a centralized exchange system or over-the-counter (OTC) networks, and they influence stock prices. Buy orders tend to increase the price, while sell orders tend to decrease it.

External factors also influence stock prices, including economic indicators, interest rates, inflation, unemployment rates, political stability, and overall market sentiment. Additionally, a company’s performance, such as its earnings, financial health, and future prospects, significantly impact its stock price.

Regulators play a crucial role in ensuring the fairness, transparency, and integrity of U.S. stock exchanges. The Securities and Exchange Commission (SEC) is the primary federal regulatory agency responsible for overseeing the securities industry, including stock exchanges, brokerage firms, and investment funds. It enforces securities laws designed to protect investors, maintain fair and efficient markets, and facilitate capital formation.

Financial Industry Regulatory Authority (FINRA) is another significant regulator, which is a private self-regulatory organization governing brokerage firms and their registered representatives. It focuses on investor protection and market integrity through effective and efficient regulation of the securities industry.

These regulatory bodies establish rules and standards that market participants must adhere to. They conduct inspections, bring enforcement actions against wrongdoers, and oversee securities firms’ compliance with legal and regulatory requirements.

For a company to get listed on a stock exchange, it must undergo an initial public offering (IPO) process. An IPO is a significant milestone for a company, as it transitions from private to public status. The company works with investment banks to navigate the complex IPO process, which involves determining the IPO price, filing necessary documents with the SEC, and meeting the specific listing requirements of the chosen exchange.

Each exchange has its set of listing requirements, including minimum thresholds for revenue, market capitalization, public float, and share price. The company must also have audited financial statements and adhere to the corporate governance standards of the exchange.

Once the SEC reviews and approves the company’s registration statement, and the exchange confirms that the company meets its listing requirements, the company’s stock can be listed and start trading on the exchange.

Stock exchanges facilitate the trading of various types of securities, providing a diverse range of investment options. The primary security traded is stocks, which represent ownership in a company. Stocks are categorized into common and preferred stocks, with each type conferring different rights and benefits to holders.

Exchanges also list bonds, which are fixed-income securities that corporations or governments issue to raise capital. Bondholders receive periodic interest payments, and the bond’s face value is returned upon maturity.

Exchange-Traded Funds (ETFs) and mutual funds are also traded on exchanges. These investment funds hold a diversified portfolio of assets, such as stocks, bonds, or commodities. They provide investors with a way to invest in a broad market segment or industry without having to buy each security individually.

Options and futures contracts are derivative securities also traded on exchanges. These financial instruments derive their value from underlying assets, such as stocks, bonds, or commodities. They provide traders with ways to hedge, speculate or increase leverage in the markets, but they also carry significant risk.

Each type of security offers different investment and trading opportunities, and individuals should understand their characteristics, risks, and how they fit into their overall investment strategy before participating in trading.