What is the Nasdaq Stock Exchange? Definition, importance and main companies

Nasdaq Inc, the owner of the Nasdaq stock exchange, went public via IPO in 2002.

What is the Nasdaq Stock Market?

The Nasdaq Stock Market (or Nasdaq Exchange) is the second largest centralized stock market in the world after the New York Stock Exchange (NYSE).

Launched in February 1971, the Nasdaq was the first fully electronic stock exchange. From the outset, it did not use a physical trading floor, opting instead for a transparent and fast electronic trading system that reduced both bid-ask spreads and trading costs.

As the Nasdaq grew in popularity, it became the de facto headquarters for technology-based growth companies in the United States. This is partly due to the stock exchange’s listing costs, which are lower than the NYSE and therefore attractive to new or expanding companies that need to allocate as much money as possible for growth.

Today, the exchange is home to many of the world’s best-known technology companies, including Apple, Meta (Facebook), Alphabet (Google), and Amazon.

Is the Nasdaq a dealer exchange or an auction exchange?

Unlike the NYSE, which operates as an auction exchange, the Nasdaq operates as a dealer exchange. This means that many market makers provide liquidity in competition with each other.

To do this, market makers post two prices for a given security at any given time, one at which they will buy the security and one at which they will sell it. By buying and selling simultaneously, these market makers collect profit via the bid-ask spread for each security they trade. For example, if a market maker bought a share of stock A for $10 and sold a share of stock A for $10.03, the bid-ask spread of $0.03 would be his profit.

In a dealer market, investors use brokers (most of which are electronic) to find the lowest asks for the stocks they want to buy and the highest bids for the stocks they want to sell. Market makers, by holding large amounts of securities and being willing to buy or sell them at any time, provide broker markets with the much-needed liquidity that allows individual investors to quickly transact at current market prices. market.

Nasdaq Exchange vs. Nasdaq Composite: What’s the difference?

When you hear someone talk about the Nasdaq, they may be talking about one of two things: the Nasdaq stock exchange, which is the subject of this article, or the Nasdaq Composite, which is a stock market index . Unlike a stock exchange, which is a real marketplace for trading stocks and other securities, a stock index is essentially a theoretical portfolio that investors use as a benchmark to gauge market performance.

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TheStreet Dictionary Terms

The Nasdaq composite is a stock market index that attempts to track the performance of all stocks that trade on the Nasdaq stock exchange. These companies are weighted by market capitalization, so those that are worth more (measured by the current value of all outstanding shares) affect the price of the composite more than those that are worth less.

The Nasdaq Composite is a popular benchmark for the US stock market, but it only includes companies that trade on the Nasdaq stock exchange. However, other indices, such as the Wilshire 5000, attempt to include all publicly traded US companies, including those that trade on the NYSE. These “total market” indices may be better benchmarks for the US stock market as a whole than the Nasdaq Composite.

What are the top Nasdaq companies by market capitalization?

At the end of April 2022, the top five companies (by market capitalization) trading on the Nasdaq stock exchange were as follows.

  1. Apple (AAPL)
  2. Microsoft (MSFT)
  3. Alphabet (GOOG/GOOGL)
  4. Amazon (AMZN)
  5. Tesla (TSLA)

What are the Nasdaq listing requirements for businesses?

The Nasdaq has four different sets of listing requirements. A company must meet at least one of these sets of requirements (in addition to meeting other criteria) in order to be eligible for public listing.

Some general requirements include a minimum share price of $4 and at least 1.25 million shares floating at the time of application. Nasdaq’s complete listing requirements are described in a 19 page SEO guide available on its website.

What are the Nasdaq listing fees for businesses?

As of April 2022, the Nasdaq Exchange’s “all-inclusive” annual listing fee, which eliminates a variety of other fees that vary based on a number of factors, is as follows:

  • Up to 10 million shares: $48,000
  • 10+ to 50 million shares: $59,500
  • 50+ to 75 million shares: $81,000
  • 75+ to 100 million shares: $107,500
  • 100+ to 125 million shares: $134,500
  • 125+ to 150 million shares: $145,500
  • More than 150 million shares: $167,000

The above all-inclusive annual listing fee is just one way a company can pay to trade on the Nasdaq. The full fee structure of the scholarship can be viewed on its website.

Is the Nasdaq a publicly traded company?

Nasdaq Inc, the company that owns and operates the Nasdaq stock exchange, went public via IPO (initial public offering) in 2002. This means that investors can easily trade shares of the company using a number of popular online brokers. Nasdaq Inc’s ticker symbol is NDAQ, and unsurprisingly, and trades on the Nasdaq exchange, not the NYSE.