The NASDAQ (National Association of Securities Dealers Automated Quotations) is a stock exchange opened in 1971, currently the second largest stock market in the United States, by volume traded, behind the New York Stock Exchange. It is the largest electronic stock market in the world. Since the beginning of 2008, the stock exchange has belonged to the European-American group Nasdaq.
| National Association of Securities Dealers Automated Quotations | |
|---|---|
| Function | Stock Exchange |
| Country | United States |
| City | New York City |
| Foundation | February 4, 1971 |
| Owner | Nasdaq |
| Currency | U.S. dollar |
| Capitalization | US$ 19,340 billion (January 2021) |
| Website | NASDAQ Stock Market |
The NASDAQ index is the stock market index that measures the performance of companies listed.
History of NASDAQ
It was launched on the 4th of February 1971, thanks to the communication techniques linking brokers, originally set up by Reuters Agency – which, however, are based on an old concept set up in the 1890s and 1900s thanks to the telegraph and whose first users were precisely the stockbrokers.
It is the first electronic stock market to open in the world and the only one to operate so for fifteen years. It was founded by the National Association of Securities Dealers (NASD). Its name was originally an acronym for the National Association of Securities Dealers Automated Quotations.
Sometimes considered an antechamber to the New York Stock Exchange (NYSE) for companies not yet large enough to be listed on the latter, it has in fact kept within it most of the nascent technology companies it had welcomed in the 1980s and 1990s.
Its legal form later became that of a commercial enterprise, under the name The Nasdaq Stock Market, Inc. NASD sold part of its stake in the company in 2000 and 2001 and Nasdaq stock (code: NDAQ) was listed on the NASDAQ in 2002.
Activity
In 2019, it quoted around 3,200 stocks, many of which saw their prices collapse when their technological bets failed, not to mention the bursting of speculative or cyclical bubbles (1995, 2001, 2007…). The exchanges – continuously – take place on several servers grouped in a single room. NASDAQ listing systems are hosted by the Joseph R. Hardiman Technology Center, an all-glass building in Trumbull, Connecticut. Its ability to process continuous exchanges comes from servers, installed in the basement of the building, which can record up to 900 transactions per second.
While companies listed on the NASDAQ are often linked to the world of the Internet or IT, they can cover other economic sectors. It happens to find on the NASDAQ large companies concerning sectors of activity such as banking, distribution, biotechnology, industry, transport, etc.
It serves as a natural outlet for venture capital funds, a method of financing that consists of accepting the risk of losing money in three out of four files but compensating with the fourth, a company capable of multiplying its size by more than four over a seven- to the eight-year horizon.
NASDAQ Index
The NASDAQ stock index is calculated by taking into account all companies listed on the NASDAQ stock market and not by considering only a subset of these companies as is the case for several other stock indices. In the index, the importance of each company is proportional to its market capitalization. This index is quite volatile because the stock market contains several high-tech companies whose share values are more volatile than the stock values of companies in the traditional economy.
Statistics
On July 17, 1995, the Nasdaq Composite Stock Index closed at 1,005.89 points for the first time above the 1,000 point mark. In addition, on March 10, 2000, the index hit an all-time high of 5,048.62, signaling the beginning of the end of the dot-com boom. On April 23, 2015, the index reached a new all-time high after more than 15 years.
The table shows the days with the highest volumes of all traded stocks (single count) on the Nasdaq.
| Rank | Date | Trading volume |
|---|---|---|
| 1 | June 26, 2009 | 5.214.013.855 |
| 2 | June 24, 2016 | 5.138.426.981 |
| 3 | June 25, 2010 | 5.033.380.798 |
| 4 | Nov 9, 2016 | 4.722.533.987 |
| 5 | July 26, 2016 | 4.587.966.984 |
| 6 | March 25, 2014 | 4.486.188.694 |
| 7 | June 22, 2018 | 4.466.760.011 |
| 8 | Sep 19, 2014 | 4.425.874.101 |
| 9 | March 24, 2014 | 4.309.048.275 |
| 10 | March 21, 2014 | 4.281.975.528 |
Other NASDAQ indices
- NASDAQ Bank Index — for companies in the banking sector;
- NASDAQ Biotechnology Index — for medical and pharmaceutical companies;
- NASDAQ Computer Index — for companies that develop software and hardware;
- NASDAQ Financial Index — for companies in the financial sector, excluding banks and insurance companies;
- NASDAQ Industrial Index — for industrial companies;
- NASDAQ Insurance Index — for insurance companies;
- NASDAQ Telecommunications Index — for companies in the telecommunications sector.
Nasdaq-100
The Nasdaq-100 includes the 100 largest companies by capitalization, whose shares are listed on the NASDAQ stock exchange. The index does not include companies in the financial sector. 57% of the Nasdaq-100 represents technology companies (for the year 2021). On the Nasdaq stock exchange, the fund under the ticker QQQ follows the dynamics of the Nasdaq-100.
Below are the contract specifications for NASDAQ 100 futures and derivatives.
| Specification Contract | |||
|---|---|---|---|
| Nasdaq 100 (NDA) | Nasdaq E-Mini (ENQ) | Nasdaq Micro E-Mini (MNQ) | |
| Contract size: | $100 x Nasdaq 100 Index | $20 X Nasdaq 100 Index | $2 x Nasdaq 100 Index |
| Exchange: | CME | EMiniCME | EMiniCME |
| Sector: | Index | Index | Index |
| Tick size: | 0.25 | 0.25 | 0.25 |
| Value of the tick: | 25 USD | 5 USD | 0.5 USD |
| BPV: | 100 | 20 | 2 |
| Denomination: | Usd | Usd | Usd |
| Decimal: | 2 | 2 | 2 |
Impact on other markets
The success of the Nasdaq led the London Stock Exchange to create in the 1980s, the SEAQ, an electronic listing system to list large companies from other European countries.
At the end of 1996, the Association of European Venture Capital Specialists promoted EASDAQ, a pan-European electronic stock market project for young, fast-growing companies, to facilitate the raising of funds by entrepreneurs via venture capital.
References (sources)
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