Definition
The Nasdaq Stock Market is an American stock exchange. It is the second-largest exchange in the world by market capitalization, behind only the New York Stock Exchange located in the same city. The exchange platform is owned by Nasdaq, Inc., which also owns the Nasdaq Nordic and Nasdaq Baltic stock market network and several U.S. stock and options exchanges.
Nasdaq
What is the ‘Nasdaq’
A global electronic marketplace for buying and selling securities, as well as the benchmark index for U.S. technology stocks. Nasdaq was created by the National Association of Securities Dealers (NASD) to enable investors to trade securities on a computerized, speedy and transparent system, and commenced operations on February 8, 1971. 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, Google, Microsoft, Oracle, Amazon, Intel and Amgen.
Explaining ‘Nasdaq’
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 1 in 10 of the world’s securities transactions. Headquartered in New York, Nasdaq OMX operates 26 markets – primarily equities, and also including options, fixed income, derivatives and commodities – as well as three clearinghouses and five central securities depositories in the U.S. and Europe. Its cutting-edge trading technology is used by 70 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 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 the 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 is exemplified by the rise and fall of the Nasdaq Composite during this period. The index crossed the 1,000 mark for the first time in July 1995, soared in the following years and peaked at over 4,500 in March 2000, before slumping almost 80% by October 2002 in the subsequent correction.
Further Reading
- Factors influencing dividend policy decisions of Nasdaq firms – onlinelibrary.wiley.com [PDF]
- Three essays in finance: Informed trading on NASDAQ, contrarian trading by insider, and swap pricing. – elibrary.ru [PDF]
- NASDAQ-listed European and Asia Pacific ADRs: does market-timing affect long-term performance? – www.tandfonline.com [PDF]
- Sentiment changes, stock returns and volatility: evidence from NYSE, AMEX and NASDAQ stocks – www.tandfonline.com [PDF]
- The linkage between the US and Korean stock markets: the case of NASDAQ, KOSDAQ, and the semiconductor stocks – www.sciencedirect.com [PDF]
- Forecast of stock market based on nonharmonic analysis used on NASDAQ since 1985 – www.tandfonline.com [PDF]
- Using multivariate stochastic volatility models to investigate the interactions among NASDAQ and major Asian stock indices – www.tandfonline.com [PDF]
- International diversification, capital structure and cost of capital: evidence from ICT firms listed at NASDAQ – www.tandfonline.com [PDF]
- A test for rational bubbles in the NASDAQ stock index: A fractionally integrated approach – www.sciencedirect.com [PDF]
- A comparison of volatility and bid–ask spread for NASDAQ and NYSE after decimalization – www.tandfonline.com [PDF]
