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What is the NASDAQ Stock Exchange?

Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

Read this lesson to learn how the second largest stock exchange in the world got its start. You'll also learn the types of stocks that are traded on this stock exchange.

The Beginning

Today, the NASDAQ is the second largest stock exchange in the world. NASDAQ stands for National Association of Securities Dealers Automated Quotations. It is owned by Nasdaq, Inc., which also happens to have its shares on its own stock exchange with a ticker of NDAQ.

NASDAQ actually got its start not too long ago in 1971 with its first trade happening on February 8, 1971. It was the first to introduce all-electronic trading. Because of this, it attracted new growth companies such as Microsoft, Apple, and Dell.

Growth

Since 1971, NASDAQ has increased its services as well as merged and acquired various other companies.

It became a for-profit company owned by shareholders in 2000.

In 2005, the company began to offer investor and public relations services to its listed companies to help them grow. It also offered multimedia services such as technology-based monitoring along with reporting and marketing.

In 2007, NASDAQ merged with OMX, the leading exchange operator in the Nordic countries, to become the NASDAQ OMX Group. This merger helped to increase the global reach of the company.

After acquiring OMX through a merger, the next acquisition by the company was that of Thomson Reuters in 2013. Specifically, the company acquired the investor and public relations business of Thomson Reuters along with its Multimedia Solutions business. This acquisition made NASDAQ OMX Group the leading company solutions provider with a corporate client base of more than 10,000.

Today

Today, the company is known simply as Nasdaq. The company changed its name back to Nasdaq in 2014 due to the company name becoming well known and well recognized around the world. The company also made a recent acquisition in Dorsey Wright & Associates, LLC, an analytics group and index provider, in 2015. The company now lists approximately 3,100 companies and trades approximately 2 billion shares daily, more than any other United States exchange.

Market Tiers

Currently, the NASDAQ trades in three different market tiers:

  • The small cap, or Capital Market, is made up of companies with a relatively small amount of market capitalization. The requirements to be listed in this market tier are not as strict as that for the other two market tiers.
  • The Nasdaq Global Market, mid cap, is made up of 1,450 stocks that meet Nasdaq's strict requirements for financial and corporate governance.
  • Only 1,200 companies are part of the third tier, the large cap Global Select Market. This market tier is even more exclusive than the Global Market. Companies from the Global Market are reviewed every October to see if they qualify to be listed as part of the Global Select Market.

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