Updated on September 20th, 2019
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The stock market is a collection of the stocks of public companies all over the world. Just like any other market, the stock market is a general term for a place where stocks can be bought and sold. Stock exchanges are more specific markets where stocks are traded such as the New York Stock Exchange, NASDAQ, or the Shanghai Stock Exchange just to name a few. All of the stock exchanges across the world connect to create the global stock market. In this globally connected market, buyers and sellers all over the world meet to trade securities like stocks and bonds.
Also like other markets, exchanges have designated times when they are open for trading. Trading can take place in the stock market during three different time frames: Pre-market hours, Regular market hours, and After hours. The two largest exchanges in the world, the New York Stock Exchange and the NASDAQ, are open regularly from Monday-Friday 9:30am to 4:00pm Eastern Time. Extended market hours for these exchanges include Pre-market hours of 4am to 9:30am and After hours of 4pm to 8pm. All investors are able to trade during Regular market hours but availability to trade during Extended hours will depend primarily on which stock broker you are trading with. Stock exchanges are also closed on major holidays of the countries they operate in.
Let’s take a deeper look at the two largest stock exchanges in the world. Founded in the 1790’s in New York City, The New York Stock Exchange (NYSE), also known as “The Big Board”, is the largest stock exchange in the world. The New York Stock Exchange lists stocks of around 2,400 public companies, collectively valued at over 19 trillion dollars.
Founded in 1971, the second largest exchange in the world is the NASDAQ, which was also founded in New York City. The NASDAQ lists stocks of around 3,000 public companies, collectively valued at over 6 trillion dollars. The NASDAQ is also widely known for listing most of the largest technology companies in the world such as Apple, Microsoft, Intel, and Netflix.
Not all stocks meet the standards and requirements to be a part of a major stock exchange. To be listed on a major stock exchange, a company must meet the requirements of that given exchange. Some of the most common requirements revolve around how many shares are outstanding or in other words held by the public, the price per share, and how much the company earns.
For example, the New York Stock Exchange requires at least 1.1 million shares outstanding and a stock price of at least $4 a share. If a company does not meet the requirements of an exchange, they cannot be listed on it or risk being delisted from the exchange if they are already on it. Stocks that do not meet requirements of major exchanges are traded on Over the Counter Markets such as the Over-the-Counter Bulletin Board and Over-the-Counter Pink Sheets. These stocks are usually considered penny stocks and can be very risky investments in comparison to the well-known companies listed on the New York Stock Exchange and the NASDAQ.