The Nasdaq Stock Market is the second-largest stock market in the world by market capitalization of shares traded; only the New York Stock Exchange (NYSE) outranks it. Just like NYSE, Nasdaq is based in New York City, USA.
Only companies registered with the United States Securities and Exchange Commission (SEC) can qualify for listing on Nasdaq. There are also many other requirements to fulfil in areas such as assets, capital, public shares, shareholders, and market makers.
The Nasdaq Stock Market exchange platform is owned by the company Nasdaq Inc, which also owns and operates other stock exchanges in the United States and northern Europe: the Philadelphia Stock Exchange, the Boston Stock Exchange, Nasdaq Copenhagen, Nasdaq Helsinki, Nasdaq Iceland, Nasdaq Riga, Nasdaq Stockholm, Nasdaq Tallinn, and Nasdaq Vilnius.
The name Nasdaq is derived from an acronym used for the National Association of Securities Dealers Automated Quotations.
The Nasdaq Stock Market (in New York City)
Trading schedule
Located in New York City, the Nasdaq stock market is in the Eastern Time Zone. This is what the trading schedule for the market sessions looks like:
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)
Quotes
Quotes are available at three different levels. Level 1 shows only the highest bid and the lowest ask. Level 2 shows all public quotes of market makers, alongside information from market dealers wishing to buy or sell stock, and recently executed orders. Level 3 is used by the market makers themselves and permits them to enter their quotes and execute orders.
Market tiers
There are three market tiers at Nasdaq: small cap, mid cap and large cap.
Small cap: Capital Market (NASDAQ-CM small cap).
This is the tier that requires the smallest market capitalization. For companies that wish to be listed at this tier, the requirements are a bit less stringent that for the other two tiers.
Mid cap: Global Market NASDAQ-GM mid cap)
Market capitalization requirements, financial requirements, liquidity requirements, and corporate governance standards are more difficult to meet than for small cap.
Large cap: Global Select Market NASDAQ-GS large cap)
This tier is even more exclusive and difficult to qualify for than mid cap.
Indices
The main index for Nasdaq is the NASDAQ Composite, which includes nearly all stocks listed on the Nasdaq stock exchange. It is one of the most-followed stock market indices in the United States, and it has been published since 1971. The NASDAQ Composite started at 100 in 1971, and closed above 1,000 for the first time 1995. It is a capitalization-weighted index.
Another example of a notable Nasdaq index is the NASDAQ 100, which is comprised of equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock market. It is a modified capitalization-weighted index.
If you are interested in the financial industry companies listed on Nasdaq, take a look at the NASDAQ Financial 100 index.
History of Nasdaq
Origins and early growth
The National Association of Securities Dealers Automated Quotations was founded in 1971 by the National Association of Securities Dealers – NASD. (NADS is also the origin of the organization we today know as the Financial Regulatory Authority – FINRA.)
When the Nasdaq stock market commenced operations on February 8, 1971, it was the world´s first and only electronic stock market. Ten years later, Nasdaq traded 37% of the U.S. Securities
market´s total of 21 billion shares. Another ten years into the future, that number had grown to 46%.
Intercontinental linkage
The first intercontinental linkage of capital markets occurred in 1992, when the Nasdaq Stock Market linked up with the London Stock Exchange.
Online trading
In 1998, Nasdaq yet again broke new ground – this time by becoming the first stock market in the United States to trade online.
Nasdaq and the dot.com bubble
On March 10, 2000, the NASDAQ Composite stock market index reached an unprecedented 5,132.52. By April 17, it had fallen down to 3,227, and in the following 30 months, it dropped 78% from its top-position.
Sustainability
Nasdaq OMX is one of the founding members of the United Nation´s Sustainable Stock Exchange Initiative. The initiative was launched in June 2012, on the eve of the United Nation´s Conference on Sustainable Development.
Female CEO
In November 2016, Nasdaq´s chief operating officer (COO) Adena Friedman was promoted to chief executive officer (CEO) of Nasdaq. For the first time ever, a major exchange in the United States was run by a woman.