NASDAQ Stock Exchange
NASDAQ stock exchange is an electronic US marketplace, one of the biggest stock exchanges in the world, where traders and investors buy and sell mostly stocks from technology sector.
The NASDAQ stock exchange is an American stock exchange that is very popular with the investors. NASDAQ is an acronym for the phrase National Association of Securities Dealers Automated Quotations Systems. This is the largest securities and equity trading market that is based on electronic screen in the United States. With a market capitalization of $3.08 trillion (as of August 2010) it ranks among top 5 in the list of exchanges all over the world under this category. It boasts of a volume of $13.6 trillion (as of December 2009) and 2919 ticker symbols. There are a total of 2803 company listings under it and the currency used is the Unites States Dollars.
The trading is done mostly through network of brokers and computers in this exchange. Because of its popularity, NASDAQ has become a huge competitor for New York Stock Exchange. The options market of NASDAQ is entirely based on electronic systems and it is in here that various index options, ETFs and equities are traded. The NASDAQ stock exchange market trades more shares than any other market in the US on a per day basis.
Trading Hours
The NASDAQ stock exchange has three trading sessions: the pre-market session, the market session and the after-market hours session. Investors can trade in investment products at any time, as long as it falls under the trading sessions. The session for entries of quotes and orders is from 7am to 8 pm ET.
The pre-market trading hours run from 7 in the morning up till 9.30 am ET. After that the market hours follow, from 9.30 am till 4 pm. The market hours is followed by the after-market hours trading session, which kicks in from 4pm till 8 pm. The NASDAQ stock exchange is closed on federally mandated holidays, which are usually declared in advance for the benefit of the investors.
Trading segments
The NASDAQ stock exchange market comprises of the following two components: NASDAQ National Market and NASDAQ Small Cap Market.
These two markets are distinct and each has its own criteria of financial requirements that any company must be able to meet if it wants to list its securities on NASDAQ. Both these components have its set of annual listing fees as well as entry fees. The annual listing fee is required for continued listing.
One of NASDAQ's most unique features is its framework, which allows multiple market participants. NASDAQ provides the right amount of exposure for the companies' securities to various investors. It provides the securities ready access to market conditions, visibility in marketplace and anything else required for promoting immediate trading or continuous trading.
Main stock indices
There are three main stock indices or indexes of NASDAQ stock exchange namely NASDAQ-100, NASDAQ Composite and NASDAQ Biotechnology Index.
NASDAQ-100 is a stock market index that consists of 100 largest non-financial companies that are listed on the NASDAQ. This index also includes companies that are incorporated outside the US. It is a market value weighted index that is modified and is very different from the DJIA (Dow Jones Industrial Average).
NASDAQ Composite is an index for common stocks and securities such as ADRs, limited partnership interests, tracking stocks, etc that are listed on the stock market of NASDAQ. This index has more than three thousand components and it is highly followed by a lot of investors. This is not an exclusively US index because it also lists the investment products of non-US companies.
NASDAQ Biotechnology Index includes the securities of the company that are listed under NASDAQ. These companies are classified as either Pharmaceuticals or Biotechnology according to Industry Classification Benchmark.
Exchange History
The National Association of Securities Dealers (NASD) founded NASDAQ stock exchange in the year 1971. It is operated and owned by the NASDAQ OMX group and regulated by FINRA.
On 8th February 1971, the stock exchange trading began and NASDAQ was declared as the first electronic stock market in the world. Initially the system employed was that of a computer bulletin board which was not able to connect the buyers and sellers together.
In 1985, the NASDAQ-100 index was introduced along with the NASDAQ 100 Financial Index. Till the year 1987 most of the trading took place over the telephone but due to the 1987 stock market crash, the telephones weren't answered by the market makers and hence the SOES or Small Order Execution System was introduced. This system was an electronic method used by dealers for entering their trades.
In the year 1992, NASDAQ stock exchange joined hands with the London Stock Exchange and formed the first intercontinental linkage of markets that dealt in securities. In 1998 it merged with the American Stock Exchange. In 2000, NASD formed the NASDAQ Stock Market, Inc. Recently, in the year 2007 the PHLX or Philadelphia Stock Exchange was purchased by NASDAQ for 652 million US dollars.
Written by: Goran Dolenc
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