Reply To: Explain why companies prefer NASDAQ for initial public offering

Although the exchanges may seem the same, they are not. NSDAQ is , in fact a broker-dealer market. This indicates that the NASDAQ exchange serves as the counterparty for each trade executed there. As a result, when shareholders sell their shares, NASDAQ purchases them from them even though it does not have a seller to whom it may return the shares. This implies that the NASDAQ must always hold a predetermined number of shares until a buyer is found. However, a broker-dealer driven market is where the liquidity is stronger when prices become particularly volatile.