The History of the NASDAQ

by | Aug 28, 2018 | INTERMEDIATE, INVESTING 101 |

About NASDAQ

The National Association of Securities Dealers Automated Quotations, or NASDAQ, is an American stock-exchange that is the second largest exchange and the largest electronic stock market in the world. There are currently about 3,200 publicly traded companies listed on the exchange. The NASDAQ is located within New York City and uses the United States Dollar as its currency. There are certain specifications a company must meet to be listed on the NASDAQ. Companies must maintain a stock price of one dollar or greater in addition to a total value of outstanding stocks of $1.1 million to have their listing included. Unlike other stock markets, there is no trading floor and all exchanges are completed electronically. The NASDAQ Stock Exchange is owned and operated by Nasdaq, Inc., a multi-national financial services corporation that also owns and operates eight European stock exchanges.

NASDAQ Beginnings

The NASDAQ was founded in 1971 by the National Association of Securities Dealers and began trading on February 8, 1971 as the world’s first electronic stock market. In its beginnings, the NASDAQ was a quotation system and unpopular with brokerages that made their money on the spread. Initially, these exchanges were completed through a computer bulletin board and over the telephone. The NASDAQ was a major market of over-the-counter (OTC) securities trading and eventually assumed the label OTC in the media, as well as in Standard & Poor’s issued guides.
The NASDAQ stock market company has attracted the involvement of tech giants such as Apple, Microsoft, Oracle, and Dell with its introduction to the United States of online trading. Another contribution attributed to the NASDAQ has been the modernization of the IPO, or Initial Public Offering. In 1987, the National Association of Securities Dealers separated from the NASDAQ.

Recent History

The NASDAQ Stock Market created another “first” by merging with the London Stock Exchange in 1992 to create the first intercontinental link of securities markets. However, the NASDAQ is most commonly associated with attracting the large tech companies in their infancy in the early 1990’s during the dot-com boom. In early 2000, the index peaked at over 4,500 and then sunk by 80% two years later due to the burst of the dot-com bubble. The NASDAQ stock market status was changed to a licensed national securities exchange in 2006 and, in 2007, Nasdaq created a merger with a Nordic based exchange operator, OMX. The formerly known Nasdaq became the NASDAQ OMX Group.

On the eve of the United Nations Conference on Sustainable Development in 2012, NASDAQ OMX founded the United Nations Sustainable Stock Exchanges Initiative, which encourages sustainable investments and corporate sustainability. The company continues to follow its pattern of corporate trailblazing when, in 2016, Nasdaq promoted its Chief Operating Officer Adena Friedman to Chief Executive Officer, making her the first woman to run a major exchange in the United States.

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