Nasdaq is an online global market for securities trading, serving as the world’s first electronic stock exchange. It operates 29 markets, a clearinghouse, and five central securities depositories in the United States and Europe.
What is Nasdaq ?
Nasdaq is a global electronic marketplace for securities trading that began operations in 1971. Initially, its name was an acronym for the National Association of Securities Dealers Automated Quotations. The exchange was developed as a subsidiary of the National Association of Securities Dealers (NASD), now known as the Financial Industry Regulatory Authority (FINRA).
Nasdaq commenced operations after the Securities and Exchange Commission (SEC) called upon the National Association of Securities Dealers (NASD) to automate the market for non-listed securities on an exchange.
How does Nasdaq work?
As mentioned above, Nasdaq is an exchange headquartered in New York. It started as a subsidiary of NASD and officially began operations on February 8, 1971. It is the world’s first automated exchange.
The exchange officially separated from NASD and began operating as a national securities exchange in 2006. In 2008, it merged with the Scandinavian exchange group OMX to form the Nasdaq OMX Group. The company changed its name to Nasdaq Inc. in 2015.
Which country’s stock exchange is Nasdaq?
Nasdaq is a U.S.-based stock exchange. The exchange lists and trades over 5,000 companies on a daily basis, with many of these companies being large technology firms such as Apple (AAPL) and Microsoft (MSFT). Nasdaq consists of two distinct markets: the Nasdaq National Market and the Nasdaq Smallcap Market. While the National Market facilitates the trading of large securities, the Smallcap Market includes trading for smaller growth companies.
The exchange operates 29 markets facilitating stock, derivative products, fixed income, and commodity trading in the United States, Canada, Scandinavia, and the Baltic countries. Additionally, the company operates a clearinghouse in the United States and Europe, along with five central securities depositories. Its trading technology is utilized by 100 exchanges in 50 countries around the world.
The term Nasdaq is also used to refer to the Nasdaq Composite, an index comprising over 2,500 stocks listed on the exchange. This index includes some major technology giants:
- Apple (AAPL)
- Microsoft (MSFT)
- Alphabet (GOOG, GOOGL)
- Meta Platformlar (META)
- Amazon (AMZN)
- Tesla (TSLA)
On November 19, 2021, the Nasdaq Composite closed at a record high of 16,057.44. From this point, the index experienced a decline of more than 23% until April 2022.
The 13.3% decline of the Nasdaq Composite in April 2022 marked its worst monthly drop since October 2008, when the index lost 17.4% during the global financial crisis. It closed at 13,787.92 on June 30, 2023.
The trading system
The Nasdaq computerized trading system was initially designed as an alternative to the inefficient specialist system, which had been a prevalent model for almost a century. The rapid development of technology has standardized the electronic trading model for global markets.
The most suitable way for the world’s promising technology companies to trade is on an exchange that utilizes the latest technology. As the technology sector gained significance in the 1980s and 1990s, the Nasdaq Composite Index became the most widely quoted representative of this sector.
In addition, after experiencing an approximately 150% increase over the 16-month period until March 2000, the Nasdaq Composite Index declined by almost 80% by October 2002.
