Updated June 3, 2023
Full Form of NASDAQ (National Association of Securities Dealers Automated Quotations)
Full Form of NASDAQ (National Association of Securities Dealers Automated Quotations) is a stock and securities exchange platform and currently stands at the second position in the world (The New York Stock Exchange is the 1st). Its everyday trading affairs conduct electronically through market makers (dealers) instead of physical transactions. This stock and security exchange market attracts more growth-oriented businesses and tech-based companies as compared to other exchange platforms.
The full form of NASDAQ (National Association of Securities Dealers Automated Quotations) has its headquarters in New York City – 43rd and Broadway, Times Square. NASDAQ is the first stock market in the world with electronic dealing established in 1971. The current Chief Executive Officer of NASDAQ is Adena Friedman. She joined the company as a CEO in 2014.
Full Form of NASDAQ attracts the listings of blue-chip companies from around the world and many of those listings are from the internet, high-technology software, and computer market. Although many other companies have listed their shares on the NASDAQ stock exchange, some of the biggest names are Starbucks, Amazon, Apple, Meta (Facebook), Tesla, Microsoft, Intel, and Gilead Sciences. As NASDAQ attracts growth-oriented businesses, the stocks are usually more volatile as compared to other stock exchange platforms. Being the 2nd largest stock exchange platform in the world, NASDAQ doesn’t only trade in listed stocks but OTC (over-the-counter) stocks as well. All the symbols of the stock ticker on this platform have up to five letters.
If we look into the history of NASDAQ, there has been a consistent track of groundbreaking achievements and apart from being the first electronic stock exchange platform in the world, NASDAQ was also the 1st in the list to introduce a website. The storage of all the records occurs in the cloud and this technology was also sold to other trading platforms. National Association of Securities Dealers Automated Quotations came into a partnership with OMX ABO. It is a Nordic and Baltic regional operator exchange platform from Stockholm. After that, the name changed to Nasdaq, Inc., and along with dealing in stocks, it also focused on the exchange of commodities, structured products, debts, traded exchange-traded funds, and derivatives. According to the last recorded data, there are approximately 3,765 companies listed and their market cap has crossed $19.4 billion (as of 2021).
Different Tiers of NASDAQ
If a company wants to enlist itself at the NASDAQ, it needs to meet certain criteria and based on that, the list of the company’s stocks in one of the three markets.
1. Capital Market
The market is popular as SmallCap before NASDAQ changed its name. It enlists a long list of companies that have a small market capitalization.
2. Global Market
This market enlists stocks of those companies that have a middle market capitalization. The list of many international and USA-based companies.
3. Global Select Market
The weightage of the market is according to the market capitalization and compromises of international and US companies. These companies should pass the highest standards laid out by NASDAQ. The Listing Qualifications Department surveys the Global Select Market every year.
Working Mechanism of NASDAQ
The design of this stock exchange platform is with the mindset of providing automated quotations to its users. At the earliest, the company focused on facilitating OTC stocks and the practice was so frequent that NASDAQ turned synonymous with OTC. Many trade publications and media houses started calling it the OTC market. But after a few years of practice, NASDAQ introduced an automatic trading system to create volume and trade reports. Looking from the point of an investor, all the transactions happen through a dealer called a “market maker”. There was no direct auction of stocks.
Requirements for Trading on NASDAQ
If a company wants to enlist its securities or stock on the electronic exchange platform of NASDAQ, it should fulfill the following requirements.
- The company should register with SEC (Securities Exchange Commission).
- Fulfill requirements laid out in terms of corporate governance, finances, and liquidity.
- Meet requirements based on the volume of trading and size of the company.
- Have three market makers (minimum).
Trading Hours of the Electronic Exchange
If a company wants to trade at NASDAQ, the timings (ET) for the same are from 9:30 in the morning to 4 in the evening. Its pre- and post-market hours are also set for the traders.
- Pre-market: 4 a.m. to 9:30 a.m.
- Post-market: 4 p.m. to 8 p.m.