When trying to find a inventory ticker, there’s at all times a prefix in entrance of it: the alternate the place the corporate publicly lists its shares. Generally, firms select to checklist on the NASDAQ. This can be a computerized market for the shopping for and promoting of securities traded over-the-counter—and even some NYSE listings. It’s an acronym for Nationwide Affiliation of Securities Sellers Automated Quotations (NASDAQ).
The NASDAQ is a modern-day pillar of the inventory market: one of many two powerhouse exchanges buyers flip to each day to facilitate trades. It has an extended and storied historical past, and continues to evolve as one of many world’s largest securities marketplaces. Right here’s a take a look at the NASDAQ and its position within the funding world.
Historical past of the NASDAQ
NASDAQ was the world’s first digital securities market, created by the Nationwide Affiliation of Securities Sellers (NASD)—often called the Monetary Trade Regulatory Authority (FINRA) in the present day. It was a revolutionary step towards digital quoting and buying and selling, at a time when shopping for and promoting largely happened in-person or over-the-phone. It rapidly rose to prominence as a most popular market for tech firms to checklist and commerce their inventory.
The know-how powering the NASDAQ is what propelled it to prominence, and different exchanges rapidly adopted its strategies. By way of the years, the alternate grew not solely within the variety of firms that selected to checklist with it, but additionally by way of mergers and acquisitions with different exchanges. Within the early 2000s, it mixed with OMX Group, a Scandinavian alternate, to develop into the world’s largest alternate firm.
At the moment, NASDAQ lists roughly 3,700 firms, and one in 10 commerce transactions occurs inside its market. It’s develop into the popular alternate for brand new firms itemizing shares publicly and one of many largest monetary entities on this planet because of its partnerships and stakes in exchanges throughout the globe.
Main Corporations Listed on the NASDAQ
Initially centered on itemizing shares for tech firms, the NASDAQ stays very tech-focused in the present day. That is evident within the top-heavy assortment of tech firms that comprise the alternate’s largest tickers. A few of the largest by market cap embody:
- Apple (NASDAQ: AAPL), $2.287 trillion
- Microsoft (NASDAQ: MSFT), $1.749 trillion
- Amazon (NASDAQ: AMZN), $1.608 trillion
- Alphabet (NASDAQ: GOOG), $1.241 trillion
- Fb (NASDAQ: FB), $735.8 billion
Tech shares make up simply shy of fifty% of complete NASDAQ listings. Shopper companies make up one other 20%, whereas healthcare is available in at 10% of firms listed. The remaining 20% of firms listed on the NASDAQ break up pretty evenly throughout financials, industrials and client items. There are only a few utilities, telecoms, supplies, and oil and gasoline firms listed on the alternate.
The NASDAQ Composite Index (NASDAQ: IXIC) mirrors these allocations, giving buyers the chance to put money into nearly each firm listed with the alternate. There’s additionally the NASDAQ 100 (NASDAQ: NDX), which incorporates the most important ~100 securities from the NASDAQ. Each are market cap weighted indices.
How the NASDAQ Works
When firms go public, they want to decide on an alternate to checklist shares on. Many firms select the NASDAQ due to its decrease barrier to entry, versus the NYSE or different exchanges. Itemizing usually prices a brand new firm between $55,000-$80,000 relying on the variety of shares issued at IPO. There’s additionally an annual charge of $43,000-$77,000 to take care of the itemizing.
That is comparatively inexpensive in comparison with the NYSE, which costs $150,000-$295,000 to checklist and the higher of $0.00113 per share or $71,000 to take care of the itemizing.
As soon as listed, buyers have the power to purchase and promote shares of firms on the NASDAQ alternate. Not like the NYSE which has designated market makers, NASDAQ is a seller market: market makers compete with each other. Sellers keep a listing of shares and facilitate shopping for and promoting utilizing their very own shares. There are greater than 260 such market makers competing inside the NASDAQ market, which ensures consumers and sellers get one of the best costs on bid-ask.
All through its historical past, the NASDAQ has been one thing of a trailblazer for digital buying and selling. It has additionally paved the way in which for brand new types of market governance and requirements. There are a number of very fascinating info concerning the alternate which have contributed to its rise to one of many world’s most distinguished.
- NASDAQ isn’t one single market; relatively, it’s a set of them. NASDAQ operates 25 markets, one clearinghouse and 5 central securities depositories.
- As of 2019, NASDAQ can be concerned in cryptocurrency alternate. The platform at the moment collaborates with seven crypto exchanges to facilitate trades.
- In 2020, the NASDAQ proposed a rule to the SEC requiring board of director range of not less than one feminine and one underrepresented minority, in a bid to advertise inclusion.
- Over 90 exchanges in additional than 50 nations use the buying and selling know-how pioneered by NASDAQ.
The NASDAQ continues to be one of the progressive and forward-thinking exchanges on this planet. As one of many largest, it additionally units precedent for a lot of different exchanges. It continues to be a pressure for change within the investing world.
A Pillar of the Trendy Inventory Market Atmosphere
At the moment, nearly all securities exchanges occur digitally. That is doable because of the know-how pioneered by the Nationwide Affiliation of Securities Sellers Automated Quotations (NASDAQ).
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This aggressive market of market makers ensures free-flowing alternate of inventory at optimum costs, bringing liquidity to the market and accessibility to buyers world wide. It’s not solely a spot the place firms checklist shares and buyers come to commerce them—it’s a pillar of the fashionable inventory market atmosphere.