Type Stock exchange Location New York City, United States Founded February 4, 1971 Owner NASDAQ OMX Group No. of listings 2,872 MarketCap US$4.72 trillion (Feb 2011) Volume US$982 billion (Feb 2011) Indexes NASDAQ Composite
NASDAQ Biotechnology Index
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". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of January 13, 2011, there are 2,872 listings. The NASDAQ has more trading volume than any other electronic stock exchange in the world.
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 the Financial Industry Regulatory Authority (FINRA).
With the incomplete purchase of the Nordic-based operated exchange OMX, following its disagreement 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 NASDAQ Dubai stock exchange. It has a double-listing agreement with OMX, and will compete with NYSE Euronext group in attracting new listings. Bernie Madoff is a co-founder of Nasdaq, a former Chairman of the NASD.
When the NASDAQ stock exchange began trading on February 8, 1971, it 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 start trading online. Nobody before them had ever done this, 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. NASD spun off NASDAQ in 2000 to form a publicly traded company, the NASDAQ Stock Market, Inc.
In 2006 NASDAQ changed from stock market to licensed national exchange.
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 United States Securities and Exchange Commission (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.
In February, 2011, in the wake of an announced merger of NYSE Euronext with Deutsche Börse, speculation developed that Nasdaq and IntercontinentalExchange (ICE) could mount a counter-bid of their own for NYSE. Nasdaq could be looking to acquire the American exchange's cash equities business, ICE the derivatives business. As of the time of the speculation, "NYSE Euronext’s market value was $9.75 billion. Nasdaq was valued at $5.78 billion, while ICE was valued at $9.45 billion." Late in the month, Nasdaq was reported to be considering asking either ICE or the Chicago Merc to join in what would be probably have to be, if it proceeded, an $11-12 billion counterbid.
EASDAQ (European Association of Securities Dealers Automatic Quotation System) was a European electronic securities exchange headquartered in Brussels. Founded originally as a European equivalent to NASDAQ, it was purchased by NASDAQ in 2001 and became NASDAQ Europe. In 2003, it shut down operations as a result of the burst of the dot-com bubble. In 2007, NASDAQ Europe was revived as Equiduct and is currently operating under Börse Berlin.
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 dealers wishing to sell or buy stock and recently executed orders.
- Level 3 is used by the market makers and allows them to enter their quotes and execute orders.
- NASDAQ Capital Market
- NASDAQ Global Market
- NASDAQ Global Select Market
- NASDAQ PORTAL Market
- ^ World-exchanges.org Archived 13 February 2011 at WebCite
- ^ Frequently Asked Questions. NASDAQ.com. NASDAQ, n.d. Web. 23 Dec. 2009. Archived 13 February 2011 at WebCite
- ^ "China becomes world's third largest stock market". The Economic Times. June 19, 2010. Archived from the original on 2011-02-13. http://economictimes.indiatimes.com/markets/global-markets/China-becomes-worlds-third-largest-stock-market/articleshow/6068129.cms. Retrieved 19 June 2010.
- ^ NASDAQ Companies - NASDAQ.com Archived 13 February 2011 at WebCite
- ^ "NASDAQ Performance Report". NASDAQ Newsroom. The Nasdaq Stock Market. 2007-01-12. Archived from the original on 2011-02-13. http://www.nasdaq.com/newsroom/stats/Performance_Report.stm#item_2. Retrieved 2007-02-15.
- ^ De la Merced, Michael J., "Nasdaq and ICE Hold Talks Over Potential N.Y.S.E. Bid", The New York Times Dealbook, February 18, 2011, 12:46 pm. Retrieved 2011-02-18.
- ^ Fraser, Michelle E., "Nasdaq May Ask CME or ICE for Help in NYSE Counterbid, WSJ Says", Bloomberg, February 26, 2011 9:30 AM ET. Retrieved 2011-03-01.
- ^ "Easdaq Makes A Comeback As Equiduct". Archived from the original on 2011-02-13. http://www.securitiestechnologymonitor.com/supplements/20061231/19226-1.html.
- ^ "Order Book, Level 2 Market Data, and Depth of Market". daytrading.about.com. Archived from the original on 2011-02-13. http://daytrading.about.com/od/daytradingglossary/a/OrderBook.htm.
- ^ Market Hours, NASDAQ via Wikinvest
NASDAQ OMX Group Exchanges Indexes Other holdingsGlobe Newswire Major United States stock market indexesDow Jones Industrial Average (30 large stocks; popular indicator) · NYSE Composite Index (all companies on the NYSE) · Nasdaq Composite Index (all companies on the NASDAQ; technology-heavy) · NASDAQ-100 Index (100 large NASDAQ non-financial stocks) · S&P 500 Index (500 large companies; general market analysis) · Russell 2000 Index (small-cap stocks) · Wilshire 5000 Index (total U.S. market) Stock market Types of stocks Participants Exchanges Stock valuation Financial ratios Trading theories
and strategiesAlgorithmic trading · Buy and hold · Contrarian investing · Day trading · Efficient-market hypothesis · Fundamental analysis · Market timing · Modern portfolio theory · Momentum investing · Mosaic theory · Pairs trade · Post-modern portfolio theory · Random walk hypothesis · Style investing · Swing trading · Technical analysis · Trend following
Related termsBlock trade · Cross listing · Dark liquidity · Dividend · Dual-listed company · DuPont Model · Flight-to-quality · Haircut · IPO · Margin · Market anomaly · Market capitalization · Market depth · Market manipulation · Market trend · Mean reversion · Momentum · Open outcry · Public float · Rally · Reverse stock split · Share capital · Short selling · Slippage · Speculation · Stock dilution · Stock split · Trade · Uptick rule · Volatility · Voting interest · Stock market index
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