Nasdaq

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This article is about the stock exchange. For the stock market index, see Nasdaq Composite. For the corporation that owns Nasdaq exchanges, see Nasdaq, Inc.. For the corporation's physical headquarters, see Nasdaq MarketSite.

Template:Infobox exchange Template:Nasdaq, Inc. locations

Nasdaq compared to corporate profits Template:Legend-line
  NASDAQ Index

The Nasdaq Stock Market (Lua error: expandTemplate: template "Template:IPA audio link" does not exist.; National Association of Securities Dealers Automated Quotations) is an American stock exchange based in New York City. It is the most active stock trading venue in the U.S. by volume,[1] and ranked second on the list of stock exchanges by market capitalization of shares traded, behind the New York Stock Exchange.[2] The exchange platform is owned by Nasdaq, Inc. (which the exchange also lists; ticker symbol NDAQ),[3] which also owns the Nasdaq Nordic stock market network and several U.S.-based stock and options exchanges. Although it trades stock of healthcare, financial, media, entertainment, retail, hospitality, and food businesses, it focuses more on technology stocks. The exchange is made up of both American and foreign firms, with China and Israel being the largest foreign sources.[4]

History

1972–2000

Founding and Origins

File:NASDAQ.svg
Former logo used from 1971 to 2014

Nasdaq, Inc. was founded in 1971 by the National Association of Securities Dealers (NASD), which is now known as the Financial Industry Regulatory Authority (FINRA).[5] "Nasdaq" (originally and still commonly spelled with all-capital letters as "NASDAQ") was initially an acronym for the National Association of Securities Dealers Automated Quotations.[6] On February 8, 1971, the NASDAQ Stock Market commenced operations as the world's first fully electronic stock market.[5] Initially, NASDAQ served as a "quotation system" rather than a platform for electronic trading.[7] Intel Corporation was one of the first major corporations to list its shares on NASDAQ; other major companies that have been listed on NASDAQ since its early years include Comcast and Applied Materials.[8]

Market Growth

Since the launch of NASDAQ, many major companies trading on the over-the-counter (OTC) market began switching to NASDAQ. As late as 1987, the NASDAQ exchange was still commonly referred to as "OTC" in media reports[9] and also in the monthly Stock Guides issued by Standard & Poor's Corporation.[10] Over the years, it became more of a stock market with the addition of trade and volume reporting and automated trading systems. In 1981, NASDAQ traded 37% of the U.S. securities markets' total of 21 billion shares. By 1991, NASDAQ's share had grown to 46%.[11] In 1992, the NASDAQ Stock Market joined with the London Stock Exchange to form the first intercontinental linkage of capital markets.[12]

In 1996, the SEC issued a report alleging that NASDAQ market makers fixed prices by avoiding "odd-eighths" quotes (at the time, stock prices were quoted in increments of an eighth of a dollar) to artificially widen spreads. The report was followed by a new set of rules for how NASDAQ handled orders.[13]: 102, 126 

Online Trading

In 1998, it became the first stock market in the United States to trade online, using the slogan "the stock market for the next hundred years".[14] The NASDAQ Stock Market attracted many companies during the dot-com bubble.

2000–2020

During the dot-com bubble, the NASDAQ Composite index spiked in the late 1990s. It then fell sharply as the bubble burst.
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On March 10, 2000, the NASDAQ Composite stock market index hit a then-high peak of 5,132.52, but fell to 3,227 by April 17,[15] and, in the following 30 months, fell 78% from its peak.[16]

Public listing and market change

In a series of sales in 2000 and 2001, FINRA sold its stake in the NASDAQ. On July 2, 2002, Nasdaq, Inc. became a public company via an initial public offering, listing its own shares on the exchange (traded under the ticker symbol NDAQ).[17] In 2006, the status of the NASDAQ Stock Market was changed from a stock market to a licensed national securities exchange.[18] In 2007, it merged with OMX, a leading exchange operator in the Nordic countries, expanded its global footprint, and changed its name to the NASDAQ OMX Group.[19]

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

In February 2011, in the wake of an announced merger of NYSE Euronext with Lua error in Module:Lang at line 15: attempt to index field 'lang_name_table' (a nil value)., speculation developed that NASDAQ OMX and Intercontinental Exchange (ICE) could mount a counter-bid of their own for NYSE. NASDAQ OMX could be[when?] looking to acquire the American exchange's cash equities business, ICE the derivatives business. At the time, "NYSE Euronext's market value was $9.75 billion. NASDAQ was valued at $5.78 billion, while ICE was valued at $9.45 billion."[20] Late in the month, NASDAQ was reported to be considering asking either ICE or the Chicago Mercantile Exchange to join in what would probably have to be, if it proceeded, an $11–12 billion counterbid.[21]

Acquisitions

In December 2005, NASDAQ acquired Instinet for $1.9 billion, retaining the Inet ECN and subsequently selling the agency brokerage business to Silver Lake Partners and Instinet management.[22][23][24]

The European Association of Securities Dealers Automatic Quotation System (EASDAQ) was founded as a European equivalent to the NASDAQ Stock Market. It was purchased by NASDAQ in 2001 and became NASDAQ Europe.[25] In 2003, operations were shut down as a result of the burst of the dot-com bubble.[26] In 2007, NASDAQ Europe was revived first as Equiduct and was acquired by Börse Berlin later that year.[27]

On November 7, 2007, Nasdaq acquired the Philadelphia Stock Exchange, the oldest stock exchange in the U.S.[28]

Sustainability and leadership milestones

On June 18, 2012, NASDAQ OMX became a founding member of the United Nations Sustainable Stock Exchanges Initiative on the eve of the United Nations Conference on Sustainable Development (Rio+20).[29][30]

In November 2016, chief operating officer Adena Friedman was promoted to chief executive officer, becoming the first woman to run a major exchange in the U.S.[31]

In 2016, Nasdaq earned $272 million in listings-related revenues.[32]

In October 2018, the SEC blocked the New York Stock Exchange (NYSE) and Nasdaq from raising certain market-data prices. This was the first time the commission rejected increases for the exchanges' stock market data feeds.[33][34][35]

In December 2020, NASDAQ announced that it would remove shares of four Chinese companies from indexes it maintains in accordance with Executive Order 13959.[36]

2021–present

In September 2024, the European Commission said it had carried out an unannounced inspection at the offices of Nasdaq over potential anti-competitive practices.[37]

In March 2025 the NASDAQ announced plans to introduce 24-hour 5-day a week trading on its United States exchange sometime during the second half of 2026 in response to increased global demand for U.S. equities pending approval by the U.S. Securities and Exchange Commission.[38]

Indexes

The exchange's main index is the NASDAQ Composite, which has been published since the NASDAQ's creation. It is one of the most followed indexes globally and includes all stocks listed on the exchange.[39] It uses a point-value system that is derived from the collective value of all of the securities listed on the Nasdaq exchange. In June 2020, the Nasdaq Composite crossed 10,000 points, and in December 2024, it doubled in value crossing 20,000 points.[40]

To be eligible for the Composite, securities must be listed exclusively on the Nasdaq, and must be one of the following: common stock, American Depositary Receipts (ADRs), Limited Partnership Interests, ordinary shares, Real Estate Investment Trusts (REITs), Shares of Beneficial Interest (SBIs), or trading stocks.[39]

The QQQ exchange-traded fund tracks the large-cap NASDAQ-100 index, which was introduced in 1985 alongside the NASDAQ Financial-100 Index, which tracks the largest 100 companies in terms of market capitalization.

Contract specifications

Nasdaq 100 futures are traded on the CME (Chicago Mercantile Exchange) while its derivatives, E-Mini Nasdaq 100 and Micro E-Mini Nasdaq 100 futures are traded on the EMiniCME. Below are the contract specifications for the Nasdaq 100 and derivatives.

Contract Specifications
Nasdaq 100 (NDA)[41] E-Mini Nasdaq 100 (NQ/ENQ)[42] Micro E-Mini Nasdaq (MNQ)[43]
Contract Size: $100 X Nasdaq 100 Index $20 X Nasdaq 100 Index $2 X Nasdaq 100 Index
Exchange: CME EMiniCME EMiniCME
Sector: Index Index Index
Tick Size: 0.25 0.25 0.25
Tick Value: 25 USD 5 USD 0.5 USD
BPV: 100 20 2
Denomination: USD USD USD
Decimal Place: 2 2 2

Quote availability

A quote is the price of a stock as listed on an exchange. Quotes consists of bids, the price buyers are willing to pay, and offers, the price sellers will accept.[44] Nasdaq quotes are available at three levels:

  • Level 1 shows the highest bid and lowest ask—inside quote.
  • Level 2 shows all public quotes of market makers together with information of market dealers wishing to buy or sell stock and recently executed orders.[45]
  • Level 3 is used by the market makers and allows them to enter their quotes and execute orders.[46]

Trading schedule

Nasdaq sessions in Eastern Time Zone are:

4:00 a.m. to 9:30 a.m.: extended-hours trading session (premarket)[47]

9:30 a.m. to 4:00 p.m.: normal trading session[47]

4:00 p.m. to 8:00 p.m.: extended-hours trading session (postmarket)[48]

The Nasdaq Stock Market averages about 253 trading days per year.[49]

Market tiers

Within the NASDAQ Composite Index, the NASDAQ exchange has three different market tiers for listed companies:[50]

  • Capital Market (NASDAQ-CM small cap) is an equity market for companies that have relatively small levels of market capitalization.[50] Listing requirements for such "small cap" companies are less stringent than for other Nasdaq markets that list larger companies with significantly higher market capitalization.[51]
  • Global Market (NASDAQ-GM mid cap) is made up of stocks that represent the Nasdaq Global Market. The Global Market consists of 1,450 stocks that meet Nasdaq's strict financial and liquidity requirements, and corporate governance standards. The Global Market is less exclusive than the Global Select Market.[52][53]
  • Global Select Market (NASDAQ-GS large cap) is a market capitalization-weighted index made up of US-based and international stocks that represent the NASDAQ Global Select Market Composite (NQGS). This includes companies with the largest market capitalization within the NASDAQ Composite.[54] The Global Select Market consists of 1,200 stocks that meet Nasdaq's strict financial and liquidity requirements and corporate governance standards. The Global Select Market is more exclusive than the Global Market. Every October, the Nasdaq Listing Qualifications Department reviews the Global Market Composite to determine if any of its stocks have become eligible for listing on the Global Select Market.[55][56]

Difference between NYSE and Nasdaq

After the NYSE, Nasdaq is the second largest stock exchange in the United States with a market capitalization of $19 trillion, which is about $5.5 trillion less than the NYSE as of 2021.[57][58][59] Nasdaq is a much younger organization than the NYSE, having been founded in just 1971.[60][61] In addition to age and market capitalization, there are other key differences between the two exchanges:

  • Exchange systems. Before the COVID-19 pandemic, the NYSE maintained both an electronic trading system and a trading floor system staffed by live professionals who help conduct auctions.[62][63] Nasdaq has been an all-electronic exchange since its inception.
  • Market Types. The NYSE uses an auction market to set prices, while Nasdaq uses a dealer market.[64][65] In the NYSE auction market, buyers and sellers submit competitive bids simultaneously. When the buyer's bid and the seller's request match, a transaction occurs. In the Nasdaq dealer market model, all prices are set by dealers. Dealers continually update bid (sell) and ask (buy) prices throughout the trading day.
  • Listing fees. There is a big difference in listing fees on the major stock exchanges. Listing fees on the Nasdaq range from $55,000 to $80,000 for the lowest tier of the capital market.[66][67]
  • Sectors. Investors typically view the NYSE as an exchange for older, more established companies.[68] Nasdaq tends to be home to newer companies focused on technology and innovation.[69]

See also

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References

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  4. ↑ "Fact Sheet U.S. – Israel Economic Relationship". United States embassy in Israel.
  5. ↑ 5.0 5.1 Terrell, Ellen. (October 2012). "History of the American and Nasdaq Stock Exchanges". Archived copy. archived April 14, 2013. original.
  6. ↑ Frequently Asked Questions. NASDAQ.com. NASDAQ, n.d. Web. December 23, 2001. Archived April 29, 2010, at the Wayback Machine
  7. ↑ Kennon, Joshua. (March 26, 2019). "What Is the NASDAQ?". Dotdash. Archived copy. archived March 17, 2019. original. accessed September 16, 2019.
  8. ↑ Probasco, Jim. (2024-07-19). "Exploring Nasdaq: The Digital Stock Market Powerhouse". Business Insider. Archived copy. archived 2024-12-23. original. accessed 4 June 2025.
  9. ↑ Gilpin, Kenneth N.. (July 3, 1987). "Company News: An Erratic Quarter for Stock Markets". The New York Times. Archived copy. archived August 1, 2017. original.
  10. ↑ Salinger, Lawrence M.. (June 14, 2013). "Encyclopedia of White-Collar and Corporate Crime". (in en).
  11. ↑ Widder, Pat. (May 24, 1992). "NASDAQ Has Eye On Next 100 Years". Chicago Tribune. Archived copy. archived April 29, 2022. original. accessed September 16, 2019.
  12. ↑ Odekon, Mehmet. (March 17, 2015). "Booms and Busts: An Encyclopedia of Economic History from the First Stock Market Crash of 1792 to the Current Global Economic Crisis: An Encyclopedia of Economic History from the First Stock Market Crash of 1792 to the Current Global Economic Crisis". Archived copy. archived August 3, 2017. original.
  13. ↑ Patterson, Scott. (2012). "Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System".
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  15. ↑ "NASDAQ Composite daily index". Archived copy. archived November 22, 2010. original.
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  17. ↑ "INVESTOR FAQS". Archived copy. archived September 30, 2019. original. accessed September 16, 2019.
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