Nasdaq is a global electronic marketplace for buying and selling securities. Originally an acronym for "National Association of Securities Dealers Automated Quotations"—it was a subsidiary of the National Association of Securities Dealers (NASD), now known as the Financial Industry Regulatory Authority (FINRA). Nasdaq was created as a site where investors could trade securities on a computerized, speedy, and transparent system.1 It commenced operations on Feb. 8, 1971.
KEY TAKEAWAYS:-
Nasdaq is an online global marketplace for buying and trading securities—the world's first electronic exchange.
It operates 25 markets, one clearinghouse, and five central securities depositories in the United States and Europe.
Most of the world's technology giants are listed on the Nasdaq.
The term “Nasdaq” is also used to refer to the Nasdaq Composite, an index of more than 3,000 stocks listed on the Nasdaq exchange that includes the world’s foremost technology and biotech giants such as Apple, Alphabet (Google), Microsoft, Meta (formerly Facebook), Amazon, and Intel.
Nasdaq officially separated from the NASD and began to operate as a national securities exchange in 2006. In 2007, it combined with the Scandinavian exchange group OMX to become the Nasdaq OMX Group, which is the largest exchange company globally, powering one in 10 of the world’s securities transactions.
Headquartered in New York, Nasdaq OMX operates 25 markets—primarily equities and also including options, fixed income, derivatives, and commodities—as well as one clearinghouse and five central securities depositories in the United States and Europe.5 Its cutting-edge trading technology is used by 90 exchanges in 50 countries. It is listed on the Nasdaq under the symbol NDAQ and has been part of the S&P 500 since 2008.
The Nasdaq Trading Platform:
The Nasdaq computerized trading system was initially devised as an alternative to the inefficient “specialist” system, which had been the prevalent model for almost a century. The rapid evolution of technology has made Nasdaq’s electronic trading model the standard for markets worldwide.
As a leader in trading technology from the outset, it was only fitting that the world’s technology giants chose to list on the Nasdaq in their early days. As the technology sector grew in prominence in the 1980s and 1990s, the Nasdaq became the most widely followed proxy for this sector.
The technology and dot-com boom and bust of the late 1990s are exemplified by the rise and fall of the Nasdaq Composite—an index that should not be confused with the Nasdaq trading platform. According to the Corporate Finance Institute, the index crossed the 1,000-mark for the first time in July 1995, soared in the following years, and peaked at over 5,000 in March 2000. It then slumped almost 80% by October 2002 in the subsequent correction.
In April 2000, the index fell to 3,227 and hit a low in October 2002 of 1,108.49. After the bust, the index gradually recovered until 2007/2008, when the global financial crisis hit.
The NYSE is an auction market that uses specialists (designated market makers), while the Nasdaq is a dealer market with many market makers in competition with one another. Today, the NYSE is part of Intercontinental Exchange (ICE), and the Nasdaq is part of the publicly traded Nasdaq, Inc.
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