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Nasdaq

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TypeStock exchange
LocationNew York City, United States
FoundedFebruary 8, 1971
OwnerThe NASDAQ OMX Group
Key peopleRobert Greifeld (CEO)
CurrencyUnited States dollar
No. of listings3,800~
IndicesNASDAQ Composite
NASDAQ-100
NASDAQ Biotechnology Index
Websitewww.nasdaq.com

The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations," but the exchange's official stance is that the acronym is obsolete.[1] It is the largest electronic screen-based equity securities trading market in the United States and fourth largest by market capitalization in the world.[2] With approximately 3,700 companies and corporations, it has more trading volume than any other stock exchange in the world.[3]

History

It was founded in 1971 by the National Association of Securities Dealers (NASD), who divested themselves of it in a series of sales in 2000 and 2001. It is owned and operated by the NASDAQ OMX Group, the stock of which was listed on its own stock exchange beginning July 2, 2002, under the ticker symbol Nasdaq: NDAQ. It is regulated by FINRA.

With the completed purchase of the Nordic-based operated exchange OMX, following its agreement with Borse Dubai, NASDAQ is poised to capture 67% of the controlling stake in the aforementioned exchange, thereby inching ever closer to taking over the company and creating a trans-atlantic powerhouse. The group, now known as Nasdaq-OMX, controls and operates the NASDAQ stock exchange in New York City – the second largest exchange in the United States. It also operates eight stock exchanges in Europe and holds one-third of the Dubai Stock Exchange. It has a double-listing agreement with OMX, and will compete with NYSE Euronext group in attracting new listings.

When the NASDAQ stock exchange began trading on February 8, 1971, the NASDAQ was the world's first electronic stock market. At first, it was merely a computer bulletin board system and did not actually connect buyers and sellers. The NASDAQ helped lower the spread (the difference between the bid price and the ask price of the stock) but somewhat paradoxically was unpopular among brokerages because they made much of their money on the spread.

NASDAQ was the successor to the over-the-counter (OTC) system of trading. As late as 1987, the NASDAQ exchange was still commonly referred to as the OTC in media and also in the monthly Stock Guides issued by Standard & Poor's Corporation.

Over the years, NASDAQ became more of a stock market by adding trade and volume reporting and automated trading systems. NASDAQ was also the first stock market in the United States to advertise to the general public, highlighting NASDAQ-traded companies (usually in technology) and closing with the declaration that NASDAQ is "the stock market for the next hundred years." Its main index is the NASDAQ Composite, which has been published since its inception. However, its exchange-traded fund tracks the large-cap NASDAQ-100 index, which was introduced in 1985 alongside the NASDAQ 100 Financial Index.

Until 1987, most trading occurred via the telephone, but during the October 1987 stock market crash, market makers often didn't answer their phones. To counteract this, the Small Order Execution System (SOES) was established, which provides an electronic method for dealers to enter their trades. NASDAQ requires market makers to honor trades over SOES.

In 1992, it joined with the London Stock Exchange to form the first intercontinental linkage of securities markets. NASDAQ's 1998 merger with the American Stock Exchange formed the NASDAQ-Amex Market Group, and by the beginning of the 21st century it had become the largest electronic stock market (in terms of both dollar value and share volume) in the United States. NASD spun off NASDAQ in 2000 to form a publicly traded company, the NASDAQ Stock Market, Inc.

On November 8, 2007, NASDAQ bought the Philadelphia Stock Exchange (PHLX) for US$652 million. PHLX is the oldest stock exchange in America—having been in operation since 1790.

To qualify for listing on the exchange, a company must be registered with the SEC, have at least three market makers (financial firms that act as brokers or dealers for specific securities) and meet minimum requirements for assets, capital, public shares, and shareholders.

Quote availability

NASDAQ quotes are available at three levels:

  • Level 1 shows the highest bid and lowest offer — the inside quote.
  • Level 2 shows all public quotes of market makers together with information of market makers wishing to sell or buy stock and recently executed orders.[4]
  • Level 3 is used by the market makers and allows them to enter their quotes and execute orders.

Trading schedule

NASDAQ has a pre-market session from 7:00am to 9:30am, a normal trading session from 9:30am to 4:00pm and a post-market session from 4:00pm to 8:00pm (all times in ET).[5]

Indices

Markets

See also

References

  1. ^ Frequently Asked Questions. NASDAQ.com. NASDAQ, n.d. Web. 23 Dec. 2009.
  2. ^ "China becomes world's third largest stock market". Economic Times. Retrieved 19 Jun 2010.
  3. ^ "NASDAQ Performance Report". NASDAQ Newsroom. The Nasdaq Stock Market. 2007-01-12. Retrieved 2007-02-15.
  4. ^ "Order Book, Level 2 Market Data, and Depth of Market". daytrading.about.com.
  5. ^ Market Hours, NASDAQ via Wikinvest
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