About the NASDAQ

Wednesday, November 25, 2009

The NASDAQ, an acronym for National Association of Securities Dealers Automated Quotations, is an electronic stock exchange with 3,300 company listings. It currently has a greater trading volume than any other U.S. exchange, making approximately 1.8 billion trades per day. The NYSE is still considered the biggest exchange because its market capitalisation far exceeds that of the NASDAQ. The NASDAQ trades shares in a variety of companies, but is well known for being a high-tech exchange, trading many new, high growth, and volatile stocks. This is partially due to the fact that the listing fees on the NASDAQ are significantly lower than those for the NYSE, with the maximum price only $150,000. The NASDAQ is a publicly owned company, trading its shares on its own exchange under the ticker symbol NDAQ.

The NASDAQ, as an electronic exchange, has no physical trading floor, but makes all its trades through a computer and telecommunications system. The exchange is a dealers' market, meaning brokers buy and sell stocks through a market maker rather than from each other. A market maker deals in a particular stock and holds a certain number of stocks on his own books so that when a broker wants to purchase shares, he can purchase them directly from the market maker.

Since there is no trading floor where the NASDAQ operates, the stock exchange built the NASDAQ MarketSite in New York's Times Square to create a physical presence. The tower has a large outdoor electronic display, giving current financial information 24 hours a day. The company also has a studio here where it broadcasts financial market updates.

For a stock to be listed on the NASDAQ National Market, the company must meet certain strict financial criteria. For example, they must maintain a stock price of at least $1, and the total value of outstanding stocks must be at least $1.1 million. However the NASDAQ also has a market for smaller companies unable to meet these and other requirements, called the NASDAQ Small Caps Market. NASDAQ will move companies from one market to the other as their eligibility changes.


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