Nasdaq facts for kids
| Nasdaq Stock Market | |
|---|---|
Quick facts for kids NASDAQ Logo.svg |
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| NASDAQ Composite Index.webp | |
| Type | Stock exchange |
| Location | [[New York City]], U.S. |
| Founded | February 8, 1971 |
| Owner | Nasdaq, Inc. |
| Currency | United States dollar |
| No. of listings |  4,061 (Feb 2024) |
| MarketCap |  US$23.414 trillion (Feb 2024) |
| Indexes |
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The Nasdaq Stock Market is a major stock exchange located in New York City. It's one of the busiest places in the U.S. for trading company shares. Nasdaq is known for being an electronic market, meaning most trading happens through computers, not on a physical trading floor. It is owned by a company called Nasdaq, Inc..
Contents
History of Nasdaq
The Early Years (1971–2000)
The name "Nasdaq" originally stood for "National Association of Securities Dealers Automated Quotations." It was created in 1971 by the National Association of Securities Dealers (NASD). On February 8, 1971, Nasdaq officially opened as the world's first electronic stock market. At first, it mainly showed prices, but it soon grew to handle actual trades.
Over time, Nasdaq became a very important stock market. It added ways to report trades and automated trading systems. By 1991, Nasdaq handled nearly half of all stock trades in the U.S. In 1992, Nasdaq even teamed up with the London Stock Exchange. This created the first connection between major stock markets on different continents.
In 1998, Nasdaq became the first U.S. stock market to allow trading online. Many new technology companies joined Nasdaq during the "dot-com bubble" in the late 1990s.
Nasdaq has several important indexes that track how well different groups of companies are doing. The main one is the NASDAQ Composite. Another popular one is the NASDAQ-100, which includes 100 of the largest non-financial companies listed on Nasdaq.
Nasdaq in the 2000s and Beyond
In March 2000, the NASDAQ Composite index reached its highest point during the dot-com bubble. However, it then fell sharply over the next two and a half years.
In 2002, Nasdaq Inc. became a public company, meaning its own shares could be bought and sold by the public. In 2006, the Nasdaq Stock Market officially became a licensed national securities exchange. This gave it more power and responsibility. In 2007, Nasdaq joined with OMX, a big exchange company in Nordic countries. This helped Nasdaq grow its reach around the world.
To have a company's shares listed on Nasdaq, the company must follow rules set by the United States Securities and Exchange Commission (SEC). It also needs to have a certain number of market makers (firms that help buy and sell shares) and meet minimum requirements for its value and number of public shares.
In 2016, Adena Friedman became the chief executive officer of Nasdaq. She was the first woman to lead a major stock exchange in the U.S.
How Nasdaq Works
Understanding Stock Quotes
Nasdaq provides different levels of information about stock prices:
- Level 1 shows the best price a buyer is willing to pay (the "bid") and the lowest price a seller is willing to accept (the "ask").
- Level 2 shows all the public prices from different market makers. It also includes information about who wants to buy or sell stock and recent trades.
- Level 3 is used by the market makers themselves. It allows them to set their own prices and complete trades.
Trading Hours
The Nasdaq Stock Market has specific hours for trading, based on the Eastern Time Zone:
- 7:00 a.m. to 9:30 a.m.: This is an early trading session before the main market opens.
- 9:30 a.m. to 4:00 p.m.: This is the normal trading session for the day.
- 4:00 p.m. to 8:00 p.m.: This is an extended trading session after the main market closes.
Nasdaq usually has about 253 trading days each year.
Market Tiers
The Nasdaq Stock Market has three different levels, or "tiers," for companies to list their shares:
- Capital Market (also called NASDAQ-CM small cap): This market is for smaller companies. The rules for listing here are not as strict as for the other Nasdaq markets.
- Global Market (NASDAQ-GM mid cap): This market includes about 1,450 stocks. Companies here must meet Nasdaq's strong financial and business standards. It's less exclusive than the Global Select Market.
- Global Select Market (NASDAQ-GS large cap): This is the most exclusive market. It has about 1,200 stocks from companies that meet Nasdaq's toughest financial and business rules. Every October, Nasdaq checks to see if any companies from the Global Market can move up to the Global Select Market.
Nasdaq vs. New York Stock Exchange (NYSE)
Nasdaq is the second largest stock exchange in the United States, after the NYSE. Nasdaq is much newer, having started in 1971, while the NYSE is much older. Here are some other key differences:
- Trading Systems: Nasdaq is an all-electronic exchange. This means all trading happens through computers. The NYSE also uses an electronic system, but it used to have a physical trading floor where people would buy and sell shares in person.
- Market Types: The NYSE uses an "auction market" system. In this system, buyers and sellers openly offer prices, and when their prices match, a trade happens. Nasdaq uses a "dealer market" system. Here, special firms called "dealers" set the prices for buying and selling shares throughout the day.
- Listing Fees: It costs money for a company to list its shares on an exchange. Nasdaq's listing fees are generally lower, ranging from $55,000 to $80,000 for the smallest companies. The NYSE is more expensive, with its lowest listing fee starting at $150,000.
- Types of Companies: Investors often see the NYSE as a place for older, more established companies. Nasdaq, on the other hand, is often home to newer companies, especially those in technology and innovation. Because of this, some investors might see Nasdaq-listed companies as having more potential for growth, but also more risk.
See also
- ACT (NASDAQ)
- Advanced Computerized Execution System
- Directors Desk
- Economy of New York City
- List of stock exchange mergers in the Americas
- List of stock exchanges in the Americas
- NASDAQ futures
- Supermontage (SM) integrated trading system
- United States corporate law
Images for kids
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The official logo of Nasdaq.
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NASDAQ Composite Index.webp
A graph showing the Nasdaq Composite Index.
