The Nasdaq Stock Market is an American stock exchange, based in New York City’s Times Square. It was founded in 1971 and is known for being the first electronic exchange, trading stocks through a computerized system rather than on a physical trading floor. Today, Nasdaq is home to some of the world’s largest tech companies and is considered a leading indicator of the health of the tech sector.
The term “Nasdaq” is also used to refer to the Nasdaq Composite, an index of more than 3,700 stocks listed on the Nasdaq exchange that includes technology giants Apple Inc. (AAPL), Microsoft (MSFT), Google parent Alphabet (GOOG, GOOGL), Meta Platforms Inc. (META), Amazon.com Inc. (AMZN) and Tesla Inc. (TSLA).
Nasdaq officially separated from the NASD and began to operate as a national securities exchange in 2006. In 2008, it combined with the Scandinavian exchanges group OMX to become the Nasdaq OMX Group.
The company changed its name to Nasdaq Inc. (NDAQ) in 2015.
History of Nasdaq:
The Nasdaq was established in 1971 by the National Association of Securities Dealers (NASD), which was created in 1939 to regulate over-the-counter (OTC) trading. The Nasdaq began trading stocks in February 1971, with 50 stocks listed on the exchange. Over the years, the Nasdaq has grown to become the second-largest stock exchange in the world by market capitalization.
Today, Nasdaq is home to some of the world’s largest and most innovative tech companies, including Apple, Amazon, Microsoft, Google, and Facebook. In fact, the Nasdaq is often referred to as the “tech-heavy” stock exchange, given the concentration of tech companies that trade on the exchange.
The Nasdaq is also known for its use of technology to facilitate trading. It was the first stock exchange to trade stocks using a computerized system, and it has continued to innovate in this area over the years. For example, Nasdaq launched its own electronic trading platform, known as the Nasdaq Market Center, in 2006.
The Nasdaq computerized trading system was initially devised as an alternative to the inefficient “specialist” system, which had been the prevalent model for almost a century. The rapid evolution of technology has made Nasdaq’s electronic trading model the standard for markets worldwide.
The Nasdaq Composite Index is perhaps the most well-known Nasdaq index. It tracks the performance of all the companies listed on the exchange. However, there are also several other Nasdaq indices that track specific sectors or subsets of companies.
For example, the Nasdaq-100 Index tracks the performance of the 100 largest non-financial companies listed on the Nasdaq. This index includes some of the world’s most valuable companies, such as Apple, Microsoft, Amazon, and Facebook. Another popular Nasdaq index is the Nasdaq Biotechnology Index, which tracks the performance of biotech companies listed on the exchange.
On Dec. 1, 2020, Nasdaq proposed a new rule requiring companies listed on the exchange to report on the diversity of their board of directors. The rule requires companies to include on their boards at least one female director and one who is a member of an underrepresented minority or LGBTQ+, or to publicly explain why they have not done so. The SEC approved the board diversity disclosure rule on Aug. 6, 2021.
Investing in Nasdaq:
Investors who want to invest in Nasdaq-listed companies can do so through a variety of investment vehicles, such as exchange-traded funds (ETFs), mutual funds, or individual stocks. Nasdaq ETFs allow investors to gain exposure to a broad range of Nasdaq-listed companies, while mutual funds may provide more targeted exposure to specific sectors or subsets of companies.
Individual stocks can also be purchased through a brokerage account. Many online brokers now offer commission-free trading, making it easier and more affordable for individual investors to buy and sell stocks.
The Nasdaq Stock Market has a long and storied history, and today it is known as a leading indicator of the health of the tech sector. With its focus on innovation and use of technology to facilitate trading, Nasdaq is likely to remain a key player in the world of finance for many years to come. Investors who are interested in gaining exposure to Nasdaq-listed companies can do so through a variety of investment vehicles, making it easier than ever to invest in this important stock exchange.