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Home  >  Fundamental analysis  >  World exchanges  >  NASDAQ stock market and exchange

NASDAQ stock market and exchange

NASDAQ is one of the most well-known stock exchanges in the world.

NASDAQ is an acronym for National Association of Securities Dealers Automated Quotations. It was founded by the National Association of Securities Dealers (NASD) who divested it in a series of sales in 2000 and 2001. It is owned and operated by The Nasdaq Stock Market, Inc. NASDAQ: NDAQ which was listed on its own stock exchange in 2002. NASDAQ is the largest electronic screen-based equity securities market in the United States. With approximately 3,300 companies, it lists more companies and, on average, trades more shares per day than any other U.S. market. The current chief executive is Robert Greifeld.

The NASDAQ MarketSite LED video display at the corner of Broadway and 43rd Street in New York City is one of the largest of its kind in the world.

A computerized system established by the NASD to facilitate trading by providing broker/dealers with current bid and ask price quotes on over-the-counter stocks and some listed stocks. Unlike the Amex and the NYSE, the Nasdaq does not have a physical trading floor that brings together buyers and sellers.

Instead, all trading on the Nasdaq exchange is done over a network of computers and telephones. Also, the Nasdaq does not employ market specialists to buy unfilled orders like the NYSE does. The Nasdaq began when brokers started informally trading via telephone; the network was later formalized and linked by computer in the early 1970s.

In 1998 the parent company of the Nasdaq purchased the Amex, although the two continue to operate separately. Orders for stock are sent out electronically on the Nasdaq, where market makers list their buy and sell prices. Once a price is agreed upon, the transaction is executed electronically.

On July 17, 1995 the NASDAQ stock index closed above the 1,000 mark for the first time. The index peaked at 5132.52 on March 10, 2000, which signaled the beginning of the end of the dot-com boom stock market bubble. The index declined to half its value within a year and is still valued at less than half its peak. However, NASDAQ is now the largest U.S. electronic stock market.

NASDAQ allows multiple market participants to trade through its electronic communications networks (ECNs) structure, increasing competition. The Small Order Execution System (SOES) is another NASDAQ feature, introduced in 1987, to ensure that in 'turbulent' market conditions small market orders are not forgotten but are automatically processed.

The technology-heavy NASDAQ Composite index peaked in March 2000, reflecting the high point of the dot-com bubble. Within a year it had declined to less than half its peak value. The rapid devaluation was cited by Al Gore as a reason he lost the Election of 2000.

With approximately 3,200 companies, it lists more companies and, on average, trades more shares per day than any other stock exchange in the world. It is home to companies that are leaders across all areas of business including technology, retail, communications, financial services, transportation, media and biotechnology. NASDAQ is the primary market for trading NASDAQ-listed stocks.

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