NASDAQ

The NASDAQ is an American dealer-based stock market in which the dealers sell electronically to investors or firms.

Learning Objective

Distinguish the NASDAQ from other stock exchanges

Key Points

NASDAQ was founded in 1971 by the National Association of Securities Dealers (NASD), who divested themselves of it in a series of sales in 2000 and 2001.
NASDAQ quotes are available at three levels: Level 1 shows the highest bid and lowest offer; Level 2 shows all public quotes of market makers; Level 3 is used by the market makers and allows them to enter their quotes and execute orders.
NASDAQ has a pre-market session from 7:00am to 9:30am, a normal trading session from 9:30am to 4:00pm, and a post-market session from 4:00pm to 8:00pm (all times in ET).
Three market tiers are NASDAQ Capital Market – Small Cap, NASDAQ Global Market – Mid Cap, NASDAQ Global Select Market – Large Cap.

Term

FINRA
In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization (SRO). FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD). Though sometimes mistaken for a government agency, it is a non-governmental organization that performs financial regulation of member brokerage firms and exchange markets. The government organization which acts as the ultimate regulator of the securities industry, including FINRA, is the Securities and Exchange Commission.

Full Text

NASDAQ Stock Market

The NASDAQ Stock Market, also known simply as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations. " It is one of the largest stock exchanges in the world along with the New York Stock Exchange.

NASDAQ

NASDAQ is the second-largest stock exchange market in the world, as of 2012.

The NASDAQ is a dealer-based market in which stock dealers sell directly to investors or firms electronically via phone or Internet. The New York Stock Exchange conducts its trading in person.

History

NASDAQ was founded in 1971 by the National Association of Securities Dealers (NASD), who divested themselves of it in a series of sales in 2000 and 2001. It is owned and operated by the NASDAQ OMX Group and regulated by the Financial Industry Regulatory Authority (FINRA), the successor to the NASD.

When the NASDAQ stock exchange began trading on February 8, 1971, it was the world's first electronic stock market. At first, it was merely a computer bulletin board system and did not actually connect buyers and sellers. The NASDAQ helped lower the spread (the difference between the bid price and the ask price of the stock), but paradoxically was unpopular among brokerages because they made much of their money on the spread.

Firms including Microsoft began doing business through NASDAQ early in their history, and remained with this exchange as the technology industry boomed. NASDAQ became known for its concentration of tech and high-growth firms, making it the primary tech market and an indicator for industry trends.

Indices

A stock index or stock market index is a method of measuring the value of a section of the stock market. It is computed from the prices of selected stocks, which vary depending on the index. Investors and financial managers can use it as a "snapshot" to describe the market conditions, and also as a tool to compare the return on specific investments. NASDAQ's major indices include:

NASDAQ-100
NASDAQ Bank
NASDAQ Biotechnology Index
NASDAQ Transportation Index
NASDAQ Composite

The NASDAQ Composite is often referred to as the NASDAQ. It is calculated from weighting common stocks and similar securities listed on the NASDAQ stock market. Thus "NASDAQ" can mean two things: either the stock exchange itself, or the index.

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