NASDAQ is the NASDAQ stock market, an American stock exchange. Earlier it was known as National Association of Securities Dealers Automated Quotations, but now it is no longer used. It is an equity securities trading market with an electronic screen based phenomenon and is the largest such electronic equity securities trading market in the US.
NASDAQ came into existence in 1971 and was founded by the National Association of Securities Dealers (NASD). They disinvested themselves following a series of sales in 2000 and 2001, and NASDAQ is currently operated by NASDAQ OMX Group, whose regulation is carried out by Securities and Exchange Commission. The NASDAQ boasts of about 3,700 companies and has the highest trading volume than any other stock exchange in the world.
Over the years NASDAQ has transformed itself into more of a stock market. This transformation is a result of introduction of adding trade and volume reporting and automated trading systems. NASDAQ was the first US stock market to introduce advertising to general public, highlighting the trading companies in NASDAQ and it is also said that “NASDAQ is the stock market for next hundred years”.
NASDAQ consists of three other indexes out of which NASDAQ Composite is the main one followed by NASDAQ-100 and NASDAQ biotechnology index. NASDAQ Composite is a stock market index consisting of over 3,000 components of common stocks and similar securities which are listed on the NASDAQ stock market. This is not an exclusively U.S. index as consists of both U.S. and non U.S. companies. NASDAQ-100 is a value weighted index and consists of 100 largest international as well as domestic non-financial companies which are listed on the NASDAQ.
NASDAQ is mostly preferred and is a popular choice among investors as there is no physical trading done and the traded stocks are dealt in an automated manner. One must always remember that it is important to analyze the stocks before trading so as to cut down the risks.
The advantages of trading in NASDAQ are- during the trading day, one may buy and sell at any time, there is no sponsorship or management fees and one may acquire a broad market portfolio. However, there are some disadvantages- a highly concentrated index may be volatile as compared to other indexes, the stock prices are subject to fluctuation.
To be listed on the NASDAQ a company must be SEC registered and should meet the minimum requirements for capital, assets, shareholders and public shares.
