Definition And History:
The NASDAQ (National Association of Securities Dealers Automated Quotations) is a stock exchange located in New York City. It is the second largest stock exchange in the world by market capitalization, after the New York Stock Exchange (NYSE).
The NASDAQ was founded in 1971 as the world’s first electronic stock market, and it was created to enable investors to trade stocks on a computerized, transparent, and efficient platform. The NASDAQ is known for its high-tech and innovative companies, such as Apple, Google, and Amazon, which have made it the go-to exchange for tech-focused investors.
What does it do?
One of the key features of the NASDAQ is its use of a market-maker system. In this system, a market maker is a firm that has committed to buying and selling a particular stock at all times, providing liquidity to the market. This ensures that there are always buyers and sellers for a stock, which helps to keep the market efficient and stable.
The NASDAQ is also known for its use of a quote-driven trading system, which allows investors to see real-time quotes for stocks on the exchange. This allows investors to make informed decisions about when to buy or sell a particular stock, and it helps to ensure that the market is fair and transparent.
In addition to its high-tech focus and innovative trading systems, the NASDAQ is also known for its strict listing requirements. In order to be listed on the NASDAQ, a company must meet certain financial and operational standards, such as having a minimum number of shareholders and a minimum level of share liquidity. This helps to ensure that only strong and viable companies are listed on the exchange, which helps to protect investors.
Despite its many strengths, the NASDAQ has faced its share of challenges over the years. In the late 1990s, the NASDAQ experienced a period of explosive growth, with the dot-com bubble driving the prices of many tech stocks to unsustainable levels. When the bubble burst in 2000, the NASDAQ saw a significant decline in its overall value.
In recent years, the NASDAQ has continued to be a key player in the global stock market, and it remains a popular destination for investors looking to trade tech stocks. With its focus on innovation and efficiency, the NASDAQ is likely to continue to be a major force in the world of finance for years to come.
Some well-known companies that are listed on NASDAQ include:
- Apple
- Microsoft
- Amazon
- Alphabet (Google’s parent company)
- Tesla
- Intel
- Cisco
- eBay
- Comcast
- Oracle
These are just a few examples of the many companies that are listed on NASDAQ. As a stock exchange, NASDAQ is composed of the stocks of various companies from a range of industries, so the exact composition can vary over time.
