The New York Stock Exchange stands as the world’s premier platform for equity trading. Whether markets are volatile or stable, data indicates that stocks perform better on the NYSE. Our portfolios, support issuers, and ensure consistent trading conditions.
Exchange models matter. Lower volatility correlates directly with lower implicit trading costs. Investors benefit from the fact that the daily trading range of NYSE stocks is less volatile than that of Nasdaq securities.
Chart 2: NYSE Stocks Trade in Tighter Ranges
Note: Full Day Trading Range is the difference between the consolidated high price and low price for the trading day, divided by the average of the high and low price, in basis points. The data in all charts except Chart 5 are averages for all corporate securities with an end of 2019 market capitalization of at least $500 million.
NYSE stocks are 50 to 65 bps less volatile than Nasdaq stocks across all market conditions.
Superior technology helps control volatility. Infrastructure upgrades at the NYSE in 2019 have delivered more durable, actionable, and precise quotes through increased bandwidth and more deterministic performance.
NYSE Tighter Bid / Offer Spreads Attract Institutional Investors
NYSE stocks trade with tighter spreads than those listed on Nasdaq. When investors evaluate a position, the cost of entering and exiting a stock can determine overall returns. If a stock features a wider spread, it can create a drag on portfolio performance and discourage institutional buyers.
Chart 3: NYSE Stocks Have Narrower Spreads
Note: This chart analyzes the average spread size of all corporate securities with a market cap above $500 million.
Note: Spreads are calculated as the time-weighted difference between the national best offer price – national best bid price divided by the average of the offer and bid price in basis points during regular trading hours (9:30AM – 4:00PM).
Limiting spread costs is a fundamental component of many trading strategies. NYSE stocks trade with smaller spreads.
The NYSE full day average spread size was 46% smaller than Nasdaq in early weeks of the sell-off.
NYSE Excels into the Close
More than 20% of U.S. trading activity occurs during the final 30 minutes of regular trading hours. The regulatory obligation of NYSE Designated Market Makers to provide liquidity at various price levels is a significant advantage as the closing auction nears.
Traders understand that the combination of tighter spreads and larger quote sizes is a winning formula. The NYSE maintains a substantial advantage in dollar value available at the NBBO during the critical final 30 minutes of the trading day.
Chart 4: NYSE Stocks Offer More Late-Day Liquidity
Note:Liquidity at the inside measures the average of the dollar value at the national best bid price and the national best offer price. We provide this data both for the full trading day (9:30AM – 4:00PM) and the last half hour of the trading day (3:30Pm – 4:00PM).
Investors prefer trading stocks that offer meaningful liquidity on the quote and smaller spreads.
The NYSE average notional quote size is larger at the most essential points of the trading day under all market conditions.
The NYSE Closing Auction is the largest global equities liquidity event on a daily basis. The NYSE establishes the official closing price types and the precision of the NYSE DMM toolkit. Benchmark return strategies, index values, derivative reference prices, and NAV calculations rely on our ability to close stocks at the correct price.
Amid elevated volatility and volumes, many experts are studying the various exchange auction models. We look forward to their formal results. Preliminary feedback indicates the NYSE closing process is saving investors over $10 million dollars a day.
Trading Halts: In March 2020 NYSE Had Significantly Fewer LULD Halts
In March 2020, the U.S. Market Wide Circuit Breaker (MWCB) was triggered four times. Additionally, a significant number of securities were halted due to stock-specific Limit Up/Limit Down (LULD) constraints. While volatility controls are important market safeguards, excessively halting securities can distort the price discovery process and frustrate investor expectations of continuous liquidity.
The NYSE market model requires that DMMs adhere to capital commitment guidelines that are far more demanding than the inconsequential quoting requirements for market makers on other exchanges. This heightened level of accountability served issuers well during the March sell-off and resulted in fewer LULD halts for NYSE-listed securities. In this chart, we expand our universe to analyze LULD statistics across all NYSE and Nasdaq-listed corporate securities.
Chart 5: NYSE Stocks Have Fewer LULD Halts
Note: Limit Up Limit Halt statistics include all corporate securities listed on the NYSE and NASDAQ
Now More Than Ever: Exchange Models Matter
Investors know stocks trade better on the NYSE. Across variable market conditions, the NYSE brings price discipline and stability to the trading process. Superior technology, strengthened by human insight, is putting quantifiable distance between the NYSE and competing equity markets. Data confirms the NYSE model saves issuers and investors money. We look forward to the return of the NYSE Trading Floor as we continue to drive positive outcomes across global capital markets.
