"Nasdaq" was initially an acronym for the National Association of Securities Dealers Automated Quotations.[7] It was founded in 1971 by the National Association of Securities Dealers (NASD), now known as the Financial Industry Regulatory Authority.[8] On February 8, 1971, the Nasdaq stock market began operations as the world''s first electronic stock market.[8] At first, it was merely a "quotation system" and did not provide a way to perform electronic trades.[9]
In 1996, the SEC issued a report alleging that Nasdaq market makers fixed prices by avoiding "odd-eighths" quotes (at the time, stock prices were quoted in increments of an eighth of a dollar) to artificially widen spreads. The report was followed by a new set of rules for how Nasdaq handled orders.[14]: 102, 126
In 1998, it became the first stock market in the United States to trade online, using the slogan "the stock market for the next hundred years".[15] The Nasdaq Stock Market attracted many companies during the dot-com bubble.
Its main index is the NASDAQ Composite, which has been published since its inception. The QQQ exchange-traded fund tracks the large-cap NASDAQ-100 index, which was introduced in 1985 alongside the NASDAQ Financial-100 Index, which tracks the largest 100 companies in terms of market capitalization.
On March 10, 2000, the NASDAQ Composite stock market index peaked at 5,132.52, but fell to 3,227 by April 17,[16] and, in the following 30 months, fell 78% from its peak.[17]
In a series of sales in 2000 and 2001, FINRA sold its stake in the Nasdaq. On July 2, 2002, Nasdaq Inc. became a public company via an initial public offering.[18] In 2006, the status of the Nasdaq Stock Market was changed from a stock market to a licensed national securities exchange.[19] In 2007, it merged with OMX, a leading exchange operator in the Nordic countries, expanded its global footprint, and changed its name to the NASDAQ OMX Group.[20]
To qualify for listing on the exchange, a company must be registered with the United States Securities and Exchange Commission (SEC), must have at least three market makers (financial firms that act as brokers or dealers for specific securities) and must meet minimum requirements for assets, capital, public shares, and shareholders.
In December 2005, NASDAQ acquired Instinet for $1.9 billion, retaining the Inet ECN and subsequently selling the agency brokerage business to Silver Lake Partners and Instinet management.[23][24][25]
The European Association of Securities Dealers Automatic Quotation System (EASDAQ) was founded as a European equivalent to the Nasdaq Stock Market. It was purchased by NASDAQ in 2001 and became NASDAQ Europe. In 2003, operations were shut down as a result of the burst of the dot-com bubble.[26] In 2007, NASDAQ Europe was revived first as Equiduct and was acquired by Börse Berlin later that year.[27]
On June 18, 2012, Nasdaq OMX became a founding member of the United Nations Sustainable Stock Exchanges Initiative on the eve of the United Nations Conference on Sustainable Development (Rio+20).[28][29]
In November 2016, chief operating officer Adena Friedman was promoted to chief executive officer, becoming the first woman to run a major exchange in the U.S.[30]
In 2016, Nasdaq earned $272 million in listings-related revenues.[31]
In October 2018, the SEC ruled that the New York Stock Exchange and Nasdaq did not justify the continued price increases when selling market data.[32][33][34]
In December 2020, NASDAQ announced that it would strip its indexes of four Chinese companies in response to Executive Order 13959.[35]
In September 2024, the European Commission said it had carried out an unannounced inspection at the offices of Nasdaq over potential anti-competitive practices.[36]
Nasdaq 100 futures are traded on the CME (Chicago Mercantile Exchange) while its derivatives, E-Mini Nasdaq 100 and Micro E-Mini Nasdaq 100 futures are traded on the EMiniCME. Below are the contract specifications for the Nasdaq 100 and derivatives.
Nasdaq quotes are available at three levels:
7:00 a.m. to 9:30 a.m.: extended-hours trading session (premarket)
9:30 a.m. to 4:00 p.m.: normal trading session
4:00 p.m. to 8:00 p.m.: extended-hours trading session (postmarket)[42]
The Nasdaq Stock Market averages about 253 trading days per year.[43]
After the NYSE, Nasdaq is the second largest stock exchange in the United States with a market capitalization of $19 trillion, which is about $5.5 trillion less than the NYSE as of 2021.[48][49][50] Nasdaq is a much younger organization than the NYSE, having been founded in just 1971.[51][52] In addition to age and market capitalization, there are other key differences between the two exchanges:
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The Nasdaq is the second largest stock exchange on earth. Over 3,700 public companies are listed for trade on the Nasdaq, with a collective market capitalization of over $23 trillion—only slightly less than the New York Stock Exchange (NYSE), with a total listed market cap of $32.7 trillion. The Nasdaq made its name as the first all-electronic exchange, and it remains the first choice of many leading tech companies.
Historically, stock exchanges were actual buildings where traders would gather to buy and sell securities. Transactions would take place on a physical trading floor, with prices determined by face-to-face negotiations between market participants. When it was founded in 1971, the Nasdaq was radically different—there was no trading floor and no in-person trading: All price quotes were supplied by computer systems, and trading was done via telephone.
This all changed after the flash crash of 1987, when it was realized that telephone trading took too long, and the exchange moved to an all-electronic system.
Today, all-electronic trading has become the norm, and very few securities exchanges still maintain a physical trading floor of any kind. One of the lesser-known outcomes of the Covid-19 pandemic has been to close down the few remaining physical trading floors.
But whether the buying and selling takes place in physical or virtual space, it''s facilitated by a network of investment firms called market makers. These firms hold and exchange the individual securities listed on any stock exchange, executing the trades you order when you decide to buy shares of stock. According to Nasdaq, over 2 billion shares trade on its electronic exchange daily, with a market value of about $12 trillion.
The companies that trade on the Nasdaq tend to skew toward tech-oriented firms. Part of that is because of the Nasdaq''s less rigorous listing requirements, which makes it a target for newer businesses, says Jason Steeno, president of CoreCap Advisors Investments.
"For an investor looking to add companies to their portfolio in the high-tech space, they would generally look to those listed on the Nasdaq," he says. "Listing requirements for newer companies, like those also offering new or emerging technologies, are generally lower on the Nasdaq, removing potential barriers for newer companies wanting to go public."
The Nasdaq exchange is open for trading between 9:30 a.m. and 4:00 p.m. ET Monday through Friday. Nasdaq also offers both pre-market and after-hours extended trading. The Nasdaq''s pre-market trading hours are from 4:00 a.m. until 9:30 a.m. ET, and after-hours trading runs from 4:00 p.m. until 8:00 p.m. ET.
Every stock exchange has its own rules for what companies can list and trade their stocks on it. In general, companies have to be registered with the U.S. Securities and Exchange Commission (SEC) and meet other exchange requirements, like financial thresholds.
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