What is nasdaq

Overview

The NASDAQ is an electronic stock exchange based in the United States where shares of publicly-traded companies are bought and sold. Unlike the New York Stock Exchange (NYSE), NASDAQ operates entirely through an electronic network of computers, making it a faster and more efficient trading platform.

How NASDAQ Works

NASDAQ uses a market-maker system where dealers compete to buy and sell stocks at different price levels. When you want to buy or sell a stock on NASDAQ, the order is matched with another trader through the electronic system. This competition helps keep bid-ask spreads tight and improves pricing for investors.

NASDAQ Composite Index

The NASDAQ Composite Index is the primary benchmark for the exchange, tracking all stocks listed on NASDAQ. The more well-known NASDAQ-100 tracks the 100 largest non-financial companies. These indices are widely used to measure the performance of technology and growth stocks.

Historical Significance

NASDAQ revolutionized stock trading by introducing automated quotation systems in 1971. During the dot-com boom of the 1990s, NASDAQ became synonymous with technology stocks and internet companies. Though it experienced a major crash in 2000-2002, NASDAQ recovered and has grown into a premier global stock exchange.

Who Can List on NASDAQ

Companies must meet specific requirements including minimum stock price, number of shareholders, and financial standards. Technology companies, biotech firms, and financial companies are particularly well-represented on NASDAQ. The exchange has different tiers with varying listing requirements.