NASDAQ - Explained
What is the NASDAQ?
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Table of ContentsWhat is the National Association of Securities Dealers Automated Quotations (NASDAQ)?How Does the NASDAQ Work?
What is the National Association of Securities Dealers Automated Quotations (NASDAQ)?
NASDAQ is an electronic securities marketplace which is the second largest stock exchange in the world in terms of market capitalization, right behind the New York Stock Exchange. The acronym NASDAQ originally stood for the National Association of Securities Dealers Automated Quotations, a platform created by the National Association of Securities Dealers (NASD) on February 8, 1971. The NASD established NASDAQ as an alternative to the traditional in-person stock transaction system to enable the investors to trade securities on a computerized transparent system.
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How Does the NASDAQ Work?
NASDAQ began to operate as an independent national securities exchange in 2006, separating itself from the NASD. In the following year, it was merged with the Scandinavian exchange group OMX to form the Nasdaq OMX group. It is the largest exchange company in the world powering 1 to 10 of the worlds securities transaction. Nasdaq OMX operates 26 markets, three cleaning houses and five central securities depositories in the United States and Europe. 70 exchanges located across 50 countries use the technology of NASDAQ OMX. It is listed on NASDAQ under the symbol NDAQ. NASDAQ has its headquarter in New York and it doesnt have a physical trading floor. The trading on this exchange is done over a network or computers and telephones. It trades the shares of various types of companies including consumer durables and non-durables, energy, finance, capital good, public utilities, transportation, and technology. The companies need to meet certain financial criteria in order to list themselves on the NASDAQ national market. The companies have to maintain a stock price of at least $1 and the value of its outstanding stocks must be at least $1.1 million. The smaller companies can be listed on the NASDAQ small caps market. In its early days, only the technology giants chose to list themselves on NASDAQ. It lists the shares of the best- known technology and biotech giants including Google, Microsoft, Apple, Amazon, and Oracle. NASDAQ is also referred to as the benchmark index for U.S. technology stocks. In 2001, NASDAQ purchased the European Association of Securities Dealers Automatic Quotation System (EASDAQ) and formed NASDAQ Europe. The operation of the NASDAQ Europe was shut down as a result of the dot-com bubble burst. It was revived in 2007 as Equiduct and is now being operated under Brse Berlin. NASDAQ OMX is a founding member of the United Nations Sustainable Stock Exchanges initiative adopted in 2012. Adena Friedman, the CEO of NASDAQ is the first woman to run a major exchange in the United States. She became the Chief Executive Officer of NASDAQ in November 2016.