Debt Dictionary

NASDAQ

Investment Dictionary -> NASDAQ

NASDAQ, also referred to as the National Association of Securities Dealers Automated Quotations, represents the American Stock Exchange. Famous as the biggest U.S. market for trading equity securities, it is known to comprise of around 3800 corporations and companies. Compared to the other global stock exchange markets, this one has the highest hourly trade volume.

NASDAQ is also famous as the first world electronic market for stocks. At the beginning, it started as a computer system that presented a bulletin board which was not really able to connect the trading parties. NASDAQ was able to reduce the difference between asked price and the bid stock price of stocks, known as spread, but was not popular because brokerages still used the spread to generate money. Nonetheless, it became a substitute for the trading systems known as “The Curb Exchange” and OTC (over the counter).

As years passed, NASDAQ established itself as a true stock market, featuring automated trading systems and been able to report on trade and volume. It also started general public advertisement campaigns of its own in the U.S. and became the first stock market to do so. The stock exchange highlighted the trading companies that use NASDAQ and always closed, declaring that for the next hundred years it will be the leading stock market. The NASDAQ composite is the main index, announced at the start.

Before 1987, the telephone was used in order for a trading to occur, but when the market crashed in October 1987, the trading parties often did not pick up the phone. To answer this problem, the SOES was established (Small Order Execution System), providing a method for entering trades electronically. SOES is required by NASDAQ in order to engage in trade. The 1992 saw the London Stock exchange and NASDAQ joined together, forming the first security market link between continents. At the start of the 21 century, the NASDAQ- Amex Market Group has become the biggest electronic market for stocks in the U.S.


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