What Is the NASDAQ Stock Exchange? Definition and Meaning

The resulting company was called Nasdaq OMX Group, and was renamed simply Nasdaq (NDAQ -1.16%) in 2015. In addition to continuing to run the Nasdaq, the company also oversees its Nasdaq Nordic markets in Denmark, Sweden, Finland, Iceland, Armenia, and the Baltic States. In addition to stocks, Nasdaq-operated exchanges also enable investors to trade in bonds, commodities, exchange-traded funds, and other more sophisticated investments. Its main index is the NASDAQ Composite, which has been published since its inception.

Whether a stock trades on the Nasdaq or the NYSE is not necessarily a determining factor for investors. It is, however, for companies that care about how each exchange is perceived. A pioneer in online operations when it launched in 1971, the Nasdaq provided a listing service for companies that had previously only traded over-the-counter (OTC).

  1. Nowadays, given the ubiquity of online trading, the location of a stock exchange refers not so much to its street address as to where its orders are transacted.
  2. Originally, it was just a quotation system — an electronic ticker of bid and ask prices — but it began adding trading and transactional systems.
  3. The Nasdaq 100 is a stock index that tracks some of the most prominent large-cap companies in the world.
  4. Its Equator CSD product is used by clients in Europe, the Middle East, Africa and the Caribbean.
  5. It opened on Feb. 8, 1971, providing automated information about stock prices that investors could use to trade stocks on other exchanges.

For example, the 10-year performance for the Nasdaq Composite Index is 263.46%, and the 10-year performance for the Nasdaq 100 Index is 372.44%, as of September 20, 2023. In addition, certain companies now have to already include on their board of directors a certain number of self-identified “diverse” directors. If these companies do not have that number on their board, they must publicly disclose why. This all changed after the flash crash of 1987, when it was realized that telephone trading took too long, and the exchange moved to an all-electronic system. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader.

Nasdaq Global Market companies must meet criteria based on income, equity, market value or total assets/revenue, have at least 1,100,000 publicly traded shares and trade at at least $4, with certain exceptions. The shares included in it are weighted according to market capitalization; the index level represents the average of the shares included in it. Share weights are calculated by dividing each security’s market capitalization by the total capitalization of all index securities.

The Tech-Heavy Nasdaq

Central counterparty clearing (CCC) technology is a significant potential growth area for OMX. OMX’s SECUR clearing[51] and Genium trading platform[52] facilitate trade novation, derivatives clearing, risk management and improved liquidity. SECUR clearing and Genium trading technology are in production around the world. The Nasdaq was created in 1971 by the then-National Association of Securities Dealers (currently known as FINRA). Originally, it was just a quotation system — an electronic ticker of bid and ask prices — but it began adding trading and transactional systems. Today, the Nasdaq plays an important role in markets and the economy, with its two major indexes — the Nasdaq Composite and the Nasdaq 100 — closely watched barometers of business.

The Nasdaq 100 can include foreign companies, while the S&P 500 is only for U.S. firms. Additionally, the Nasdaq 100 excludes companies from the financial sector, though that’s not the case for the S&P 500. Lastly, the Nasdaq 100 only consists of companies that trade on Nasdaq exchanges, while the S&P 500 consists of companies that trade on all U.S. exchanges.


The Nasdaq has also embraced cloud computing, using cloud-based solutions to store required regulatory documentation and other data. The National Association of Securities Dealers Automated Quotation (Nasdaq) is one of the largest stock exchanges in the world. Over 3,000 listings on the exchange are used in the Nasdaq Composite, an equities index used by many stock islamic forex accounts analysts and investors to gauge the stock market’s performance. As of June 2022, the NASDAQ stock market offered shares of over 3,000 global companies. The exchange provides automated trading systems, and offers key reporting and analytical tools. The exchange is led by cutting-edge trading technology, which includes the extensive usage of cloud computing.

What Is Nasdaq?

The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. The Dow focuses on 30 prominent U.S. companies on all exchanges while the S&P 500 focuses on 500 of the largest companies in the U.S. by market cap. As such, the design of the S&P 500 will include the companies in the Dow. The Dow represents 30 of the most prominent companies in the U.S. regardless of which exchange it trades on. Many of the companies included in the Dow index are listed on the Nasdaq exchange, such as Apple and Microsoft. In a nutshell, the NASDAQ is a U.S. based stock exchange that is dominated by technology stocks.

The largest ever IPO to be facilitated by a NASDAQ listing was that of Facebook in 2012. In total, the social media company were able to raise a whopping $16 billion. If you’re looking to find out exactly what the NASDAQ actually is, how it works and what sort of companies it lists, then you’ve come to the right place. We’ll also explain how you can make an investment in to the NASDAQ yourself. It also signals that a firm is successful enough to afford the expensive process of transitioning to a public company. The drawback for the company is that the founders no longer entirely own the company—the stockholders do.

Both the Dow and the Nasdaq are stock market indexes that provide insight into the broader economy. While the Nasdaq is also a stock exchange, the Dow is purely a stock market index. The Dow does include stocks on both the NYSE as well as the Nasdaq, whereas any Nasdaq indexes will include only stocks listed on Nasdaq exchanges. Investors can gain exposure to both the Dow and the Nasdaq by investing in index funds that track the indexes. As technology has advanced, the Nasdaq has created automated trading systems that not only match up orders from buyers and sellers but also provide the summary data and reporting required of all stock exchanges. Once the internet came into being, the Nasdaq became the first stock exchange with its own website, and it was the first to allow online trading.

The Nasdaq Composite’s 13.3% decline in April 2022 was its worst monthly drop since October 2008, when the index lost https://bigbostrade.com/ 17.4% amid the global financial crisis. Gordon Scott has been an active investor and technical analyst or 20+ years.

The method used by this particular fund is to use their own assets to purchase all of the companies that make up the NASDAQ-100. It does so by allocating the exact same weighting mechanisms as employed by the NASDAQ-100, with the view of mirroring its performance. So now that you know how performance of the  NASDAQ is tracked, in the next section of our guide we’ll show you how you can invest. Computer and software manufacturers warned everyone to update their computer systems so they wouldn’t fail at the stroke of midnight on Jan. 1, 2000.