Run by the National Association of Securities Dealers now acquired by the AMEX, the National Association of Security Dealers Automated Quotations (Nasdaq) began trading on February 9, 1971, as the world’s first electronic stock market. Today it is the largest electronic stock market with more than 3,000 companies listed.
The Nasdaq, National Association of Securities Dealers Automated Quotations has the largest trading volume than any other US exchange, trading approximately 1.8 billion shares per day. The exchange trades a variety of companies, but is most well known for being a high-tech exchange, trading many new, high growth and volatile stocks.
So Where’s the Trading Floor?
Because it is an electronic exchange, it has no physical trading floor, instead making all its trades through a computer and telecommunication systems. Rather than buying and selling from each other, brokers buy and sell through a market maker. A market maker is a person or firm who quotes both a buy and sell price for the stock underlying or commodity. The market maker is obligated to buy when there is an excess of sell orders and sell when here is an excess of buy orders. Their profits result on the turn, or the difference between the bid and ask, known as the spread.
Since there is no trading floor, the exchange built the Nasdaq MarketSite in New York’s Time Square thus giving it a physical presence. The tower’s large outdoor electronic display gives current financial information 24-hours a day.
The Nasdaq listing fees are significantly lower than those for the NYSE and contains lower listing requirements, allowing newer, smaller companies to become listed. The requirements are as follows.
- 400 stockholders owning at least 100 shares
- $1.1 million shares outstanding in the marketplace
- $1.0 million in operating income
- Initial market value of $8 million
The Nasdaq is a publicly owned company, trading its shares on its own exchange under the ticker symbol NDAQ.