What is Nasdaq?
The Nasdaq is a global electronic market for buying and selling securities, as well as the benchmark for US technology stocks. The Nasdaq was created by the National Association of Securities Dealers (NASD) to allow investors to trade securities on a computerized, fast and transparent system, and began operations on February 8, 1971. The term “Nasdaq” is also used to denote the Nasdaq Composite, an index of more than 3,000 stocks listed on the Nasdaq stock market which includes the world’s largest technology and biotechnology giants such as Apple, Google, Microsoft, Oracle, Amazon and Intel.
Origins of the Nasdaq
Nasdaq formally separated from NASD and began operating as a national securities exchange in 2006. In 2007, it partnered with the Scandinavian trading group OMX to become the Nasdaq OMX group, which is the largest exchange company in the world, supplying 1 in 10 of the securities transactions in the world.
New York-based Nasdaq OMX operates 25 markets – primarily equities, as well as options, fixed income securities, derivatives and commodities – as well as a clearing house and five central securities depositories in the United States and in Europe. Its advanced trading technology is used by 70 exchanges in 50 countries. It is listed on Nasdaq under the symbol NDAQ and has been part of the S&P 500 since 2008.
The Nasdaq computerized trading system was originally designed as an alternative to the ineffective “specialized” system, which had been the common model for almost a century. The rapid evolution of technology has made the Nasdaq e-commerce model the standard for markets around the world.
As a leader in commercial technology from the start, it was only fitting that global tech giants choose to be on the Nasdaq when they first started. As the technology sector grew in importance in the 1980s and 1990s, the Nasdaq became the most followed substitute for this sector. The rise and fall of dot-com technology and technology in the late 1990s is illustrated by the rise and fall of the Nasdaq Composite during this period. The index crossed the 1,000 mark for the first time in July 1995, soared in subsequent years and peaked at over 4,500 in March 2000, before falling by almost 80% in October 2002 when the subsequent correction.
Key points to remember
- The Nasdaq is a global electronic market for the purchase and trading of securities. It was the first electronic exchange in the world. Most of the global tech giants, including Apple and Facebook, are listed on Nasdaq.
- It operates in 25 markets, a clearing house and five central securities depositories in the United States and Europe.
Recent history of the Nasdaq
In February 2020, in the wake of an announced merger of NYSE Euronext with Deutsche Börse, speculation developed that NASDAQ OMX and Intercontinental Exchange (ICE) could mount their own counter offer for NYSE. At the time, the market value of NYSE Euronext was $ 9.75 billion. The Nasdaq was valued at $ 5.78 billion, while the ICE was valued at $ 9.45 billion. At the end of the month, the Nasdaq would consider asking the ICE or the Chicago Mercantile Exchange to join what should probably be, if it continues, a counter offer of $ 11 billion to $ 12 billion.
The European Securities Dealers Association (EASDAQ) was founded as the European equivalent of the Nasdaq stock exchange. It was purchased by NASDAQ in 2001 and became NASDAQ Europe. However, operations were closed due to the bursting of the Internet bubble. In 2007, NASDAQ Europe was relaunched as Equiduct, and it currently operates under Börse Berlin.
On June 18, 2020, Nasdaq OMX became a founding member of the United Nations Sustainable Scholarship Initiative on the eve of the United Nations Conference on Sustainable Development. In November 2020, Adas Friedman, chief operating officer of Nasdaq, was promoted to CEO, becoming the first woman to head a large stock exchange in the U.S. In 2020, Nasdaq generated $ 272 million in income related to registrations.
The Nasdaq reached its highest closing level on August 29, 2020, when its index peaked at 8,109.69. In 2020, it was announced that Nasdaq plans to introduce cryptocurrency futures next year in collaboration with a major investment company. (For related reading, see “NYSE American vs. Nasdaq: What’s the Difference?”)