The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American
stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
based in
New York City
New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...
. It is the most active stock trading venue in the US by volume, and ranked second on the
list of stock exchanges
This is a list of major stock exchanges. Those futures exchanges that also offer trading in securities besides trading in futures contracts are listed both here and in the list of futures exchanges.
There are sixteen stock exchanges in the world ...
by
market capitalization
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by t ...
of shares traded, behind the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
. The exchange platform is owned by
Nasdaq, Inc.
Nasdaq, Inc. is an American multinational financial services corporation that owns and operates three stock exchanges in the United States: the namesake Nasdaq stock exchange, the Philadelphia Stock Exchange, and the Boston Stock Exchange, and ...
, which also owns the
Nasdaq Nordic
Nasdaq Nordic is the common name for the subsidiaries of Nasdaq, Inc. that provide financial services and operate marketplaces for securities in the Nordic and Baltic regions of Europe.
Historically, the operations were known by the company ...
stock market network and several U.S.-based stock and
options exchanges.
History
1971–2000
"Nasdaq" was initially an
acronym
An acronym is a word or name formed from the initial components of a longer name or phrase. Acronyms are usually formed from the initial letters of words, as in ''NATO'' (''North Atlantic Treaty Organization''), but sometimes use syllables, as ...
for the National Association of Securities Dealers Automated Quotations. It was founded in 1971 by the National Association of Securities Dealers (NASD), now known as the
Financial Industry Regulatory Authority
The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associati ...
(FINRA).
On February 8, 1971, the Nasdaq stock market began operations as the world's first electronic stock market.
At first, it was merely a "quotation system" and did not provide a way to perform electronic trades.
The NASDAQ Stock Market eventually assumed the majority of major trades that had been executed by the
over-the-counter
Over-the-counter (OTC) drugs are medicines sold directly to a consumer without a requirement for a prescription from a healthcare professional, as opposed to prescription drugs, which may be supplied only to consumers possessing a valid prescr ...
(OTC) system of trading, but there are still many securities traded in this fashion. As late as 1987, the Nasdaq exchange was still commonly referred to as "OTC" in media reports and also in the monthly Stock Guides (stock guides and procedures) issued by
Standard & Poor's
S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is con ...
Corporation. Over the years, it became more of a stock market by adding 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%. In 1992, the Nasdaq Stock Market joined with the
London Stock Exchange
London Stock Exchange (LSE) is a stock exchange in the City of London, England, United Kingdom. , the total market value of all companies trading on LSE was £3.9 trillion. Its current premises are situated in Paternoster Square close to St Pau ...
to form the first intercontinental linkage of
capital market
A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers t ...
s. 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". The Nasdaq Stock Market attracted many companies during the
dot-com bubble
The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet.
Between 1995 and its peak in March 2000, the Nasdaq Compo ...
.
Its main index is the
NASDAQ Composite
The Nasdaq Composite (ticker symbol ^IXIC) is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange. Along with the Dow Jones Industrial Average and S&P 500, it is one of the three most-followed stock market indic ...
, which has been published since its inception. The QQQ
exchange-traded fund
An exchange-traded fund (ETF) is a type of investment fund and exchange-traded product, i.e. they are traded on stock exchanges. ETFs are similar in many ways to mutual funds, except that ETFs are bought and sold from other owners throughout the ...
tracks the large-cap
NASDAQ-100
The Nasdaq-100 (^NDX) is a stock market index made up of 101 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange. It is a modified capitalization-weighted index. The stocks' weights in the in ...
index, which was introduced in 1985 alongside the
NASDAQ Financial-100
The Nasdaq Financial-100 (^IXF) is a stock market index operated by Nasdaq consisting of companies that are listed on the Nasdaq stock exchange and that are in the financial services industry, including banking, insurance, mortgages and securities ...
Index, which tracks the largest 100 companies in terms of market capitalization.
2000–present
![NASDAQ Market Site 201506](https://upload.wikimedia.org/wikipedia/commons/2/29/NASDAQ_Market_Site_201506.jpg)
On March 10, 2000, the
NASDAQ Composite
The Nasdaq Composite (ticker symbol ^IXIC) is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange. Along with the Dow Jones Industrial Average and S&P 500, it is one of the three most-followed stock market indic ...
stock market index
In finance, a stock index, or stock market index, is an index that measures a stock market, or a subset of the stock market, that helps investors compare current stock price levels with past prices to calculate market performance.
Two of the ...
peaked at 5,132.52, but fell to 3,227 by April 17, and, in the following 30 months, fell 78% from its peak.
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
A public company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. A public (publicly traded) company can be listed on a stock exchange (l ...
via an
initial public offering
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
. In 2006, the status of the Nasdaq Stock Market was changed from a stock market to a licensed national securities exchange. 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.
To qualify for listing on the exchange, a company must be registered with the
United States Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
(SEC), must have at least three
market maker
A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the ''bid–ask spread'', or ''turn.'' The benefit to the firm is that it ...
s (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
NYSE Euronext, Inc. was a transatlantic multinational financial services corporation that operated multiple securities exchanges, including the New York Stock Exchange, Euronext and NYSE Arca (formerly known as ArcaEx). NYSE merged with Archip ...
with
Deutsche Börse
Deutsche Börse AG () or the Deutsche Börse Group, is a German company offering marketplace organizing for the trading of shares and other securities. It is also a transaction services provider. It gives companies and investors access to glo ...
, speculation developed that NASDAQ OMX and
Intercontinental Exchange
Intercontinental Exchange, Inc. (ICE) is an American company formed in 2000 that operates global financial exchanges and clearing houses and provides mortgage technology, data and listing services. Listed on the Fortune 500, S&P 500, and Russell ...
(ICE) could mount a counter-bid of their own for NYSE. NASDAQ OMX could be looking to acquire the American exchange's cash equities business, ICE the
derivatives
The derivative of a function is the rate of change of the function's output relative to its input value.
Derivative may also refer to:
In mathematics and economics
* Brzozowski derivative in the theory of formal languages
* Formal derivative, an ...
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." Late in the month, Nasdaq was reported to be considering asking either ICE or the
Chicago Mercantile Exchange
The Chicago Mercantile Exchange (CME) (often called "the Chicago Merc", or "the Merc") is a global derivatives marketplace based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board, an a ...
to join in what would probably have to be, if it proceeded, an $11–12 billion counterbid.
In December 2005, NASDAQ acquired
Instinet
Instinet is an institutional, agency-model broker that also serves as the independent equity trading arm of its parent, Nomura Group. It executes trades for asset management firms, hedge funds, insurance companies, mutual funds and pension funds. ...
for $1.9 billion, retaining the
Inet
Inet was an electronic trading platform based on a system developed by Instinet in the 1970s that merged with Island ECN in 2002 and was subsequently acquired by NASDAQ in 2005.
Inet, like other electronic communication networks, was an order-pair ...
ECN and subsequently selling the agency brokerage business to
Silver Lake Partners
Silver Lake is an American global private equity firm focused on investments in technology, technology-enabled and related industries. Founded in 1999, the firm is one of the largest technology investors in the world. Its investment holdings have ...
and Instinet management.
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. In 2003, operations were shut down as a result of the burst of the
dot-com bubble
The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet.
Between 1995 and its peak in March 2000, the Nasdaq Compo ...
. In 2007, NASDAQ Europe was revived first as Equiduct and was acquired by
Börse Berlin later that year.
On June 18, 2012, Nasdaq OMX became a founding member of the United Nations
Sustainable Stock Exchanges Initiative
The Sustainable Stock Exchanges (SSE) initiative promoting corporate investment in sustainable development. It is a project of the United Nations (UN) co-organized by the United Nations Conference on Trade and Development (UNCTAD), the United N ...
on the eve of the
United Nations Conference on Sustainable Development
The United Nations Conference on Sustainable Development (UNCSD), also known as Rio 2012, Rio+20 (), or Earth Summit 2012 was the third international conference on sustainable development aimed at reconciling the economic and environmental goals ...
(Rio+20).
In November 2016,
chief operating officer
A chief operating officer or chief operations officer, also called a COO, is one of the highest-ranking executive positions in an organization, composing part of the "C-suite". The COO is usually the second-in-command at the firm, especially if t ...
Adena Friedman
Adena T. Friedman (born Adena Robinson Testa; 1969) is an American businesswoman. She currently serves as the President and CEO of Nasdaq, Inc. She was formerly a managing director and CFO of The Carlyle Group. Initially joining Nasdaq in 1993, ...
was promoted to
chief executive officer
A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especially ...
, becoming the first woman to run a major exchange in the U.S.
In 2016, Nasdaq earned $272 million in listings-related revenues.
In October 2018, the SEC ruled that the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
and Nasdaq did not justify the continued price increases when selling
market data
''For market data as used in marketing, see marketing information system''
In finance, market data is price and other related data for a financial instrument reported by a trading venue such as a stock exchange. Market data allows traders an ...
.
In December 2020, NASDAQ announced that it would strip its indexes of four Chinese companies in response to
Executive Order 13959
Executive Order 13959 is a U.S. Presidential Executive Order signed on November 12, 2020, by President Donald Trump. Its title, and stated goal, is "Addressing the Threat From Securities Investments That Finance Communist Chinese Military Compani ...
.
Contract Specifications
Nasdaq 100 futures are traded on the
CME (Chicago Merchantile 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.
Quote availability
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 maker
A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the ''bid–ask spread'', or ''turn.'' The benefit to the firm is that it ...
s together with information of market dealers wishing to buy or sell stock and recently executed orders.
* Level 3 is used by the
market maker
A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the ''bid–ask spread'', or ''turn.'' The benefit to the firm is that it ...
s and allows them to enter their quotes and execute orders.
Trading schedule
The Nasdaq Stock Market sessions, with times in the
Eastern Time Zone
The Eastern Time Zone (ET) is a time zone encompassing part or all of 23 states in the eastern part of the United States, parts of eastern Canada, the state of Quintana Roo in Mexico, Panama, Colombia, mainland Ecuador, Peru, and a small por ...
are:
7:00 a.m. to 9:30 a.m.:
extended-hours trading
Extended-hours trading (or electronic trading hours, ETH) is stock trading that happens either before or after the trading day of a stock exchange, i.e., pre-market trading or after-hours trading.
After-hours trading is the name for buying and ...
session (premarket)
9:30 a.m. to 4:00 p.m.: normal trading session
4:00 p.m. to 8:00 p.m.: extended-hours trading session (postmarket)
The Nasdaq Stock Market averages about 253
trading day
In business, the trading day or regular trading hours (RTH) is the time span that a stock exchange is open, as opposed to Electronic trading hours, electronic or extended trading hours (ETH). For example, the New York Stock Exchange is, as of 2020 ...
s per year.
Market tiers
The Nasdaq Stock Market has three different market tiers:
* Capital Market (NASDAQ-CM
small cap
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's shares outstanding, outstanding common shares owned by stockholders.
Market capitalization is equal to the share price, market price p ...
) is an equity market for companies that have relatively small levels of market capitalization. Listing requirements for such "small cap" companies are less stringent than for other Nasdaq markets that list larger companies with significantly higher market capitalization.
* Global Market (NASDAQ-GM
mid cap
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by ...
) 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.
* Global Select Market (NASDAQ-GS
large cap
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by t ...
) is a market capitalization-weighted index made up of US-based and international stocks that represent the
NASDAQ Global Select Market Composite (NQGS). 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.
See also
*
ACT (NASDAQ)
*
Advanced Computerized Execution System
The Advanced Computerized Execution System (ACES) is a NASDAQ subscription service paid for by market makers that allows order-entry firms trading in Nasdaq Capital Market and Nasdaq global market stocks access to a market maker's internal trad ...
*
Directors Desk Directors Desk is a paperless boardroom for information sharing. It was founded in 2003 by a team of corporate governance and technology specialists and was acquired by the NASDAQ OMX Group
Nasdaq, Inc. is an American multinational financial s ...
*
Economy of New York City
The economy of New York City encompasses the largest municipal and regional economy in the United States. Anchored by Wall Street in Lower Manhattan, New York City has been characterized as the world's premier financial center. The city is home ...
*
List of stock exchange mergers in the Americas
This is a list of major stock exchange mergers and acquisitions in the Americas. It also features the name of any resultant stock exchanges from mergers or acquisitions. According to Robert E. Wright of ''Bloomberg'' in 2013, historians assert tha ...
*
List of stock exchanges in the Americas
This is a list of active stock exchanges in the Americas. Stock exchanges in Latin America (where Spanish and Portuguese prevail) use the term ''Bolsa de Valores'', meaning "bag" or "purse" of "values". (compare Börse in German or bourse in ...
*
NASDAQ futures NASDAQ futures are financial futures which launched on June 21, 1999. It is the financial contract futures that allow an investor to hedge with or speculate on the future value of various components of the NASDAQ market index.
Several futures inst ...
*
Supermontage
SuperMontage, abbreviated simply as SM, is an integrated trading system used in American stock exchange NASDAQ that was implemented in 2002. It features a fully integrated public limit order book and market maker quotations, the ability to enter ...
(SM) integrated trading system
*
United States corporate law
United States corporate law regulates the governance, finance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governance ...
References
External links
*
{{Authority control
1971 establishments in New York City
American companies established in 1971
Companies based in New York City
Economy of New York City
Electronic trading platforms
Financial services companies based in New York City
Financial services companies established in 1971
Private equity portfolio companies
Stock exchanges in the United States