NASDAQ – The World’s Leading Electronic Stock Exchange

Exchange Code: NASDAQ | Location: Times Square, New York City | Market Cap: $20+ trillion | Founded: 1971

Overview

The NASDAQ (National Association of Securities Dealers Automated Quotations) is the world’s second-largest stock exchange by market capitalization and the first fully electronic stock exchange. Known as the home of technology and growth companies, NASDAQ lists many of the world’s most innovative firms, including Apple, Microsoft, Amazon, Google (Alphabet), Meta (Facebook), Tesla, and NVIDIA. With over $20 trillion in market cap and 3,300+ listed companies, NASDAQ has become synonymous with the tech sector and the “new economy.”

Key Facts

Founded: February 8, 1971
Location: 4 Times Square, New York, NY (MarketSite tower)
Owner: Nasdaq, Inc. (publicly traded: NDAQ)
Market Capitalization: $20+ trillion (2nd largest globally)
Listed Companies: ~3,300
Daily Trading Volume: ~$150 billion
Trading Hours: 9:30 AM – 4:00 PM EST (Monday–Friday)
Pre-Market: 4:00 AM – 9:30 AM EST
After-Hours: 4:00 PM – 8:00 PM EST
Currency: US Dollar (USD)
Settlement: T+1 (trade date + 1 business day, as of May 2024)
Ticker Symbol Format: 4–5 letters (e.g., AAPL, MSFT, GOOGL, TSLA)
Trading Mechanism: Fully electronic (no physical trading floor)

History

Founding & Early Years (1971–1990s)

February 8, 1971: NASDAQ launched as world’s first electronic stock market
Original purpose: Provide electronic quotations for over-the-counter (OTC) stocks
Innovation: Replaced manual “pink sheets” with computerized system
Initial listings: ~2,500 OTC stocks
1975: Introduced automated trading system
1980s: Became preferred exchange for tech companies (Microsoft listed 1986, Intel 1971)
1985: NASDAQ-100 Index launched (top 100 non-financial stocks)
1991: NASDAQ Composite Index surpassed 500 points

Dot-Com Boom & Bust (1995–2002)

1995–2000: Dot-com boom – NASDAQ Composite soared from ~750 to 5,048 (March 10, 2000 peak)
1999: NASDAQ trading volume exceeded NYSE for first time
March 10, 2000: NASDAQ Composite peaked at 5,048.62 (all-time high at the time)
2000–2002: Dot-com crash – NASDAQ fell 78% from peak to 1,114 (October 2002)
Impact: Hundreds of internet companies went bankrupt; survivors (Amazon, eBay, Google) became giants

Modern Era (2000s–Present)

2000: NASDAQ restructured; became for-profit company (NASDAQ Stock Market, Inc.)
2002: NASDAQ acquired by private investors; began operating as national securities exchange
2005: NASDAQ acquired Instinet (electronic trading platform)
2007: NASDAQ acquired OMX (Nordic/Baltic exchange group); renamed NASDAQ OMX Group
2008: NASDAQ OMX became publicly traded (ticker: NDAQ)
2016: Renamed Nasdaq, Inc. (lowercase branding)
2020: NASDAQ Composite surpassed 10,000 for first time (June 2020)
2021: NASDAQ Composite peaked at 16,212 (November 2021) – all-time high
2022: Tech selloff – NASDAQ fell 33% (worst year since 2008)
2023–2024: Recovery driven by AI boom (NVIDIA, Microsoft, etc.)

Trading Mechanism

Fully Electronic Market

Unlike NYSE’s hybrid model, NASDAQ is 100% electronic with no physical trading floor:

Market Maker System

Multiple market makers: Each stock has multiple competing market makers (vs NYSE’s single DMM)
Role: Provide liquidity by continuously quoting bid/ask prices
Competition: Market makers compete for order flow (tighter spreads, better prices)
Examples: Citadel Securities, Virtu Financial, Jane Street

NASDAQ Trading Platforms

NASDAQ Market Center: Core matching engine (handles billions of shares daily)
NASDAQ TotalView: Real-time order book (depth of market data)
NASDAQ Last Sale: Real-time trade reporting
Speed: Microsecond execution (high-frequency trading optimized)

Order Types

Market Order: Buy/sell at best available price (immediate execution)
Limit Order: Buy/sell at specified price or better
Stop Order: Becomes market order when price reaches specified level
Stop–Limit Order: Becomes limit order when price reaches specified level
Immediate-or-Cancel (IOC): Execute immediately or cancel
Fill-or-Kill (FOK): Execute entire order immediately or cancel
Day Order: Valid for current trading day only
Good-Till-Canceled (GTC): Valid until executed or canceled (up to 90 days)

Trading Sessions

Pre-Market: 4:00 AM – 9:30 AM EST (electronic only; lower liquidity, wider spreads)
Regular Session: 9:30 AM – 4:00 PM EST (highest liquidity)
After-Hours: 4:00 PM – 8:00 PM EST (electronic only; lower liquidity)
Note: Extended hours trading available through most brokers (higher risk due to volatility)

Opening & Closing Crosses

Opening Cross (9:30 AM): Auction process to determine opening price; matches buy/sell orders accumulated overnight
Closing Cross (4:00 PM): Similar auction to determine closing price; high volume (index funds, ETFs rebalance at close)
Significance: ~10–15% of daily volume occurs in opening/closing crosses

Listing Requirements

NASDAQ Tiers

NASDAQ has three listing tiers with different requirements:

1. NASDAQ Global Select Market (Highest Tier)

Financial Standards (meet one):
- Standard 1 (Earnings): $11M aggregate pre-tax income (last 3 years), $2.2M in each of 2 most recent years
- Standard 2 (Capitalization with Cash Flow): $27.5M average market cap (last 12 months), $550M total assets, $80M total revenue (most recent fiscal year)
- Standard 3 (Capitalization): $850M average market cap (last 12 months), $160M total revenue (most recent fiscal year)
- Standard 4 (Assets with Equity): $160M total assets, $55M stockholders’ equity
Liquidity: 1.25M publicly held shares, $45M market value of publicly held shares
Corporate Governance: Independent board majority, audit committee, code of conduct
Bid Price: $4 minimum

2. NASDAQ Global Market (Mid Tier)

Financial Standards (meet one):
- Standard 1 (Equity): $15M stockholders’ equity, $30M market value of listed securities
- Standard 2 (Market Value): $30M market value of listed securities, $50M total assets, $50M total revenue
- Standard 3 (Net Income): $1M net income (most recent fiscal year or 2 of last 3 years), $20M market value of listed securities
Liquidity: 1.1M publicly held shares, $8M market value of publicly held shares
Bid Price: $4 minimum

3. NASDAQ Capital Market (Entry Tier)

Financial Standards (meet one):
- Standard 1 (Equity): $5M stockholders’ equity
- Standard 2 (Market Value): $50M market value of listed securities
- Standard 3 (Net Income): $750K net income (most recent fiscal year or 2 of last 3 years)
Liquidity: 1M publicly held shares, $5M market value of publicly held shares
Bid Price: $4 minimum

Continued Listing Standards

Bid Price: Must maintain $1 minimum (below $1 for 30 consecutive days triggers delisting process)
Market Value of Publicly Held Shares: $5M minimum (Global Select/Global), $1M minimum (Capital)
Stockholders’ Equity: Varies by tier ($10M Global Select, $5M Global, $2.5M Capital)
Market Makers: Minimum 2 (Global Select/Global), 1 (Capital)
Corporate Governance: Maintain independent board, audit committee, timely SEC filings

Major Indices

NASDAQ Composite Index

Symbol: ^IXIC
Components: All ~3,300 NASDAQ-listed stocks (common stocks, ADRs, REITs)
Weighting: Market-cap weighted
Created: February 5, 1971 (base value: 100)
Current Level: ~16,000–18,000 (2024, varies)
Composition: ~50% technology sector (heavily tech-weighted)
Significance: Barometer of tech sector and growth stocks

NASDAQ-100 Index

Symbol: ^NDX
Components: 100 largest non-financial NASDAQ stocks
Weighting: Modified market-cap weighted (caps prevent single stock dominance)
Created: January 31, 1985 (base value: 250)
Current Level: ~18,000–20,000 (2024, varies)
Composition: ~60% technology, ~20% consumer discretionary, ~10% healthcare
Exclusions: Financial companies excluded (banks, investment firms, insurance)
ETF: QQQ (Invesco QQQ Trust) tracks NASDAQ-100 (one of world’s most-traded ETFs)

Top 10 NASDAQ-100 Components (by weight, 2024 approximate)

Apple (AAPL): ~12%
Microsoft (MSFT): ~11%
NVIDIA (NVDA): ~7%
Amazon (AMZN): ~6%
Meta/Facebook (META): ~5%
Alphabet/Google Class A (GOOGL): ~3%
Alphabet/Google Class C (GOOG): ~3%
Tesla (TSLA): ~3%
Broadcom (AVGO): ~2.5%
Costco (COST): ~2%

Other NASDAQ Indices

NASDAQ Biotechnology Index (^NBI): Biotech companies
NASDAQ Financial-100 Index (^IXF): 100 largest financial stocks
NASDAQ Internet Index (^QNET): Internet-related companies
NASDAQ Clean Edge Green Energy Index: Clean energy companies

Top NASDAQ-Listed Companies (by Market Cap, 2024)

Rank	Company	Ticker	Market Cap	Sector
1	Apple	AAPL	$3.0T+	Technology (Consumer Electronics)
2	Microsoft	MSFT	$3.0T+	Technology (Software)
3	NVIDIA	NVDA	$2.0T+	Technology (Semiconductors)
4	Alphabet (Google) Class A	GOOGL	$1.8T	Technology (Internet)
5	Amazon	AMZN	$1.7T	Consumer Discretionary (E-commerce)
6	Meta (Facebook)	META	$1.2T	Technology (Social Media)
7	Tesla	TSLA	$800B	Consumer Discretionary (Electric Vehicles)
8	Broadcom	AVGO	$700B	Technology (Semiconductors)
9	Costco	COST	$350B	Consumer Staples (Retail)
10	Netflix	NFLX	$280B	Communication Services (Streaming)
11	Adobe	ADBE	$250B	Technology (Software)
12	Cisco	CSCO	$220B	Technology (Networking)
13	PepsiCo	PEP	$230B	Consumer Staples (Beverages)
14	Intel	INTC	$180B	Technology (Semiconductors)
15	Comcast	CMCSA	$170B	Communication Services (Cable/Media)
16	AMD	AMD	$250B	Technology (Semiconductors)
17	Qualcomm	QCOM	$200B	Technology (Semiconductors)
18	Starbucks	SBUX	$110B	Consumer Discretionary (Restaurants)
19	Booking Holdings	BKNG	$140B	Consumer Discretionary (Online Travel)
20	Intuit	INTU	$170B	Technology (Software)

Note: Market caps fluctuate daily; rankings change frequently (especially in volatile tech sector).

Sector Composition (NASDAQ)

Sector	% of NASDAQ Market Cap	Key Companies
Technology	~50%	Apple, Microsoft, NVIDIA, Alphabet, Meta, Intel, AMD, Cisco
Consumer Discretionary	~20%	Amazon, Tesla, Starbucks, Booking.com, Airbnb
Communication Services	~10%	Alphabet (Google), Meta, Netflix, Comcast, T-Mobile
Healthcare	~8%	Moderna, Regeneron, Vertex, Gilead, Amgen
Consumer Staples	~5%	Costco, PepsiCo, Mondelez, Kraft Heinz
Industrials	~3%	Honeywell, Siemens (ADR), Paccar
Financials	~2%	PayPal, Intuit (excluded from NASDAQ-100 but on NASDAQ Composite)
Other	~2%	Utilities, Real Estate, Materials

NASDAQ vs NYSE

Feature	NASDAQ	NYSE
Founded	1971	1792
Market Cap	$20T+	$25T+
Listed Companies	~3,300	~2,400
Trading Mechanism	Fully electronic	Hybrid (floor + electronic)
Market Makers	Multiple market makers per stock	Designated Market Makers (DMMs)
Ticker Symbols	4–5 letters	1–4 letters
Company Profile	Tech, biotech, growth companies	Traditional blue-chips, financials, industrials, energy
Listing Fees	Lower	Higher (prestige premium)
Examples	Apple, Microsoft, Amazon, Google, Tesla	Berkshire, JPMorgan, Walmart, ExxonMobil
Volatility	Higher (tech-heavy)	Lower (blue-chip focus)

Famous NASDAQ Moments

Historic Events

March 10, 2000: NASDAQ Composite peaked at 5,048 (dot-com bubble peak)
October 9, 2002: NASDAQ bottomed at 1,114 (78% decline from peak)
August 31, 2012: Apple became first company to reach $1 trillion market cap
May 18, 2012: Facebook IPO ($104B valuation) – largest tech IPO at the time; technical glitches delayed trading
August 22, 2013: NASDAQ halted trading for 3 hours due to technical issue (affected all stocks)
March 2020: COVID-19 crash – NASDAQ fell 30% in weeks; recovered faster than other indices (tech benefited from remote work)
November 2021: NASDAQ Composite peaked at 16,212 (all-time high)
2022: Tech selloff – NASDAQ fell 33% (rising interest rates hurt growth stocks)
2023–2024: AI boom – NVIDIA, Microsoft, Meta rally drove NASDAQ recovery

Notable IPOs

1986: Microsoft (MSFT) – $21/share IPO; now $400+/share (split-adjusted)
1997: Amazon (AMZN) – $18/share IPO; now $170+/share (split-adjusted)
2004: Google (GOOGL) – $85/share IPO; now $150+/share (split-adjusted)
2012: Facebook (META) – $38/share IPO; now $450+/share
2019: Uber (UBER), Lyft (LYFT), Pinterest (PINS), Slack (WORK)
2020: Airbnb (ABNB), DoorDash (DASH), Snowflake (SNOW)
2021: Rivian (RIVN), Coinbase (COIN)

Trading Costs & Fees

For Investors

Brokerage commissions: $0 (most US brokers offer commission-free stock trading as of 2024)
SEC fees: $0.00278 per $100 of sale proceeds (sell-side only)
FINRA Trading Activity Fee (TAF): $0.000166 per share (sell-side only; max $8.30 per trade)
Bid-ask spread: Cost of immediacy (varies by stock liquidity; NASDAQ typically tighter spreads than NYSE for high-volume stocks)

For Listed Companies

Initial listing fee: $50,000–$295,000 (based on shares outstanding and tier)
Annual listing fee: $27,500–$155,000 (based on shares outstanding and tier)
Note: NASDAQ fees generally lower than NYSE (attracts growth companies)

Circuit Breakers & Trading Halts

Market-Wide Circuit Breakers

Same as NYSE (coordinated across all US exchanges):

Level 1 (7% decline): 15-minute trading halt (if before 3:25 PM)
Level 2 (13% decline): 15-minute trading halt (if before 3:25 PM)
Level 3 (20% decline): Trading halted for remainder of day
Trigger: Based on S&P 500 decline from previous day‘s close

Single-Stock Circuit Breakers (Limit Up-Limit Down)

Purpose: Prevent extreme price moves in individual stocks
Mechanism: Trading paused if stock moves >5–10% (varies by tier) within 5-minute period
Duration: 5-minute pause; if imbalance persists, additional 5-minute pause
Note: NASDAQ stocks frequently halted due to high volatility (especially small-cap biotech, meme stocks)

Regulatory Halts

News pending (T1): Company requests halt before major announcement
SEC halt (T2): Regulatory concerns
Extraordinary market activity (T12): Unusual trading activity, potential manipulation

How to Trade NASDAQ Stocks

1. Open Brokerage Account

US Brokers: Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, Interactive Brokers, Robinhood, Webull
International Brokers: Interactive Brokers, Saxo Bank, eToro (access for non-US investors)
Requirements: ID verification, bank account, funding

2. Fund Account

Methods: Bank transfer (ACH), wire transfer, check
Time: 1–3 business days for funds to settle

3. Place Order

Search: Enter ticker symbol (e.g., AAPL for Apple, TSLA for Tesla)
Order type: Market, limit, stop, stop–limit
Quantity: Number of shares
Duration: Day order or GTC (good-till-canceled)
Extended hours: Option to trade pre-market (4:00–9:30 AM) or after-hours (4:00–8:00 PM)
Review & submit

4. Settlement

T+1: Trade settles 1 business day after execution (as of May 2024)
Cash account: Must wait for settlement before using proceeds
Margin account: Can trade with unsettled funds (subject to pattern day trader rules)

NASDAQ ETFs

Popular NASDAQ Index ETFs

ETF	Ticker	Index Tracked	Expense Ratio	AUM
Invesco QQQ Trust	QQQ	NASDAQ-100	0.20%	$250B+
Invesco NASDAQ Composite ETF	QQQJ	NASDAQ Composite (Next Gen 100)	0.15%	$5B
ProShares UltraPro QQQ	TQQQ	3x leveraged NASDAQ-100	0.95%	$20B
ProShares Short QQQ	PSQ	Inverse NASDAQ-100	0.95%	$500M
First Trust NASDAQ-100 Tech Sector	QTEC	NASDAQ-100 Tech stocks	0.57%	$5B

Note: QQQ is one of the world’s most-traded ETFs (~$50B daily volume).

International Access

For Non-US Investors

International Brokers: Interactive Brokers, Saxo Bank, eToro (offer NASDAQ access)
Local Brokers: Some local brokers offer US stock trading (check availability)
Currency: Must convert local currency to USD
Tax: US withholding tax on dividends (30% standard; reduced to 15% under tax treaties for many countries)
Capital gains: Generally not taxed in US for non-residents (taxed in home country)

Regulation

Regulatory Bodies

Securities and Exchange Commission (SEC): Federal regulator; oversees exchanges, brokers, public companies
Financial Industry Regulatory Authority (FINRA): Self-regulatory organization; oversees broker-dealers
NASDAQ Regulation: NASDAQ’s own regulatory arm (monitors trading, enforces rules)

Key Regulations

Regulation NMS (2005): National Market System rules (best execution, order protection)
Sarbanes-Oxley Act (2002): Enhanced corporate governance, financial reporting
Dodd-Frank Act (2010): Financial reform post-2008 crisis
JOBS Act (2012): Eased IPO regulations for emerging growth companies

Key Takeaways

✅ World’s leading tech exchange: Home to Apple, Microsoft, Amazon, Google, Meta, Tesla, NVIDIA
✅ Fully electronic: First all-electronic exchange (1971); no physical trading floor
✅ Growth focus: Preferred by tech, biotech, and high-growth companies
✅ NASDAQ-100 (QQQ): One of world’s most-traded indices/ETFs
✅ Lower listing fees: More accessible than NYSE for emerging companies
✅ High liquidity: Tight bid-ask spreads; fast execution
❌ Higher volatility: Tech-heavy composition = more price swings
❌ Sector concentration: ~50% technology (lack of diversification)
❌ Bubble risk: History of boom-bust cycles (dot-com 2000, crypto 2021–2022)

Related Terms

NASDAQ Composite – Index of all ~3,300 NASDAQ-listed stocks
NASDAQ-100 – Index of 100 largest non-financial NASDAQ stocks
QQQ – ETF tracking NASDAQ-100 (Invesco QQQ Trust)
Market Maker – Firm providing liquidity by quoting bid/ask prices
Electronic Trading – Computerized trading (no physical floor)
Ticker Symbol – 4–5 letter code identifying NASDAQ-listed stock
Dot-Com Bubble – 1995–2000 tech stock bubble; NASDAQ peaked at 5,048
FAANG – Facebook (Meta), Apple, Amazon, Netflix, Google (Alphabet) – all NASDAQ-listed
Magnificent Seven – Apple, Microsoft, NVIDIA, Alphabet, Amazon, Meta, Tesla

Disclaimer: This information is for educational purposes only and does not constitute financial or investment advice. Stock market investing carries risks including loss of principal. NASDAQ stocks (especially tech) are more volatile than broader market. Past performance is not indicative of future results. DYOR and consult financial professionals before investing.

Official Website: www.nasdaq.com

NASDAQ Market Data: NASDAQ Market Activity

Nasdaq, Inc. (Owner): About Nasdaq

QQQ ETF: Invesco QQQ

Related Topics: NASDAQ, Stock Market, Technology Stocks, NASDAQ-100, QQQ, Electronic Trading, Growth Stocks, Apple, Microsoft, Amazon, Google, Tesla, NVIDIA, Dot-Com Bubble, IPOs, Market Makers, NASDAQ vs NYSE

NASDAQ