What is NASDAQ?
The NASDAQ was created on Feb 8th, 1971, for the purpose of being a safe and secure site where investors could buy & sell securities through a quick and simple automated system.
The NASDAQ electronic marketplace is used worldwide for buying and selling stocks and was formally an acronym for the National Association of Securities Dealers Automated Quotations. This was when it was still considered a daughter company or subsidiary of the NASD (National Association of Security Dealers).
The NASDAQ also refers to the NASDAQ Composite Index which is the market index of over 3000 common stocks listed on the NASDAQ. These Stocks include many of the world’s tech giants like Google, Microsoft, Apple, etc. As aforementioned, the NASDAQ was formally a subsidiary of the NASD, then as of 2006 the NASDAQ split away from the NASD and began operating independently as a global security exchange. Later in 2007, it merged with OMX, a Scandinavian exchange corporation, to form the NASDAQ OMX Group, which at the time was the most popular exchange firm in the world, handling one in ten of the world’s security transactions.
Similar to the NYSE the NASDAQ also operates in New York where they manage 25 markets that mostly consist of equities, options, derivatives, and commodities. Although, the NASDAQ OMX also operates 5 central security depositories as well as a clearinghouse in the U.S. and Europe. Furthermore, due to NASDAQ’s high-quality trading technology nearly 100 exchange firms in around 50 countries across the world use the NASDAQ, this is listed on the NASDAQ as the NDAQ which has been a part of the S&P 500 for 14 years since 2008.
The NASDAQ Trading Platform
The NASDAQ’s computerized system was made to replace the ineffective specialist system which had been the previous and widely used model for over a century before the NASDAQ’s utilization. Due to the fast development of technology in the 20th century, the NASDAQ’s electronic form of trading quickly became the standard for other markets worldwide.
Moreover, with the NASDAQ being a leader in trading technology from the gecko (from the beginning) it was only natural for many of the world’s leading tech giants to list their stock on the NASDAQ. Subsequently, as the market for technology grew during the early 80s and 90s the NASDAQ slowly became the most prominent and followed commission for the technology market.
It is also evident that the dot-com boom of the late 90s is illustrated by the rise and fall of the NASDAQ Composite Index. This can be demonstrated as the index reached 1,000 for the very first time in July of 1995, then skyrocketed in the years that followed, peaking at almost 5,000 in March of 2000. During the ensuing correction, it fell by over 80% by October 2002. Later, the index declined to 3,227 in April 2000 before reaching a low of 1,108.49 in October 2002. Following the crash, the index steadily rebounded until the global financial crisis hit in 2007/2008.
Recent History of the NASDAQ
The European Association of Securities Dealers Automatic Quotation System (EASDAQ) became Europe’s equivalent to the Nasdaq Stock Market. By 2001, the NASDAQ purchased the EASDAQ and rebranded it as the NASDAQ Europe. 7 Services were closed down, although, in 2007, NASDAQ Europe was resurrected as Equiduct, and it is now part of the Börse Berlin which is a German stock exchange based in Berlin. Subsequently, upon the eve of the United Nations Conference on Sustainable Development, NASDAQ OMX had become a signatory member of the United Nations Sustainable Stock Exchanges initiative on June 18, 2012.
One should not that Adena Friedman, NASDAQ’s Chief Operating Officer, was appointed to CEO in November 2016, meaning that she was the first woman to lead a major stock exchange in the U.S.
Board Diversity Disclosure Rule
Note that as of December 1st, 2020, NASDAQ submitted to the Securities and Market Commission a change in the rules that would compel corporations and other firms listed in the stock exchange to disclose information on the diversity of its board of directors. Furthermore, most boards would be required to possess a minimum of two diverse directors, meaning that one must have a minimum of one director who identifies as female, and a minimum of one who identifies either as a disadvantaged minority or LGBTQ+ member. Following this proposal, the Securities and Market Commission passed the Board Diversity Disclosure Rule on August 6, 2021, with enforcement beginning in 2022.
Financial & Market Performance
Clients such as financial institutions, traders, investment firms, and companies all contribute to NASDAQ’s income. The majority of NASDAQ’s revenue comes from fees levied for reasons such as the following… Firstly, market services, allow traders to access different markets. Secondly, market technology, which consists of trading and settlement systems, along with anti-financial crime technology solutions. Thirdly, investment intelligence, which is the act of having access to data, indexes, and investment analytics for brokers, and institutions. Lastly, corporate services, include activities like listing fees and investor relation services.
In terms of actual numbers, NASDAQ made around $3 billion in the fiscal year ending in September 30, 2021. Followed by a strong statistic of NASDAQ generating around $800 million in revenue as of the third quarter of 2021, a close to 20% increase from last year. In addition, as of November of 2021, the Nasdaq Composite Index reached a new high of 16,057.44.