For a long time, the stock market was run on a quotation system, this all changed in February 2, 1971, when National Association of Securities Dealers Automated Quotations or NASDAQ introduced the world’s first electronic stock market. Titled the “stock market of the next 100 years”, this technology changed the landscape of the finance world, and laid the foundation for the stock market of today. As the 2nd biggest exchange in the world, NASDAQ is stronger than ever. Let’s dive into the founding and the current status of NASDAQ in this short article.
How It began
It all began when National Association of Securities Dealers (NASD) wanted to present a different way to trade to the world. In the beginning NASDAQ gained adoration from traders and anger from brokers. This came about from the innovative way NASDAQ was able to lower the spreads offered by traditional stock markets. To this day the spreads in trades are how brokers make their money, so it’s no surprise they were not welcoming of a new system that would get in the way of their profit margins by lowering the difference between the bid and ask price of stocks.
Most weren’t convinced of NASDAQ’s functionality until they changed the game by adding such functions and features as, complete trading ability, volume reporting, automated trading systems, and the first to offer online trading in the United States. When you bring technology into the finance you are sure to get attention from the giants of technology, and that is exactly what NASDAQ did, pulling in world leaders like Cisco, Dell, Apple, and of course Microsoft. Through NASDAQ Composite is the markets main index, in 1985 this exchange introduced the NASDAQ 100, listing the top 100 companies in market capitalization in NASDAQ.
NASDAQ in 2018
After starting in the United States and establishing themselves, NASDAQ spread out to 26 markets worldwide. Having been divested by their founders NASD in 2000 and 2001, NASDAQ is now owned and operated by NASDAQ Inc. The thing that made NASDAQ the second biggest stock exchange in the world, behind New York Stock Exchange, is the technology in the center of their system. This system garnered worldwide recognition and has become the standard across 90 marketplaces in 50 countries. This technology let NASDAQ become the single largest liquidity pool for U.S. equities.
Broadway New York City, NY has become the current and permanent home of NASDAQ. As of today, this exchange offers trading, clearing, settlement and depository services across cash equities, derivatives, fixed income, debt commodities, structured products and ETFs among some smaller assets. Holding a Market Capitalization of $9,585 billion, with a monthly trade volume of $965 billion, this electronic platform is as big as ever.
While early 2000s saw NASDAQ suffer massive fall in value, things are on the rise as expected. A 2007 merger with OMX, saw this exchange spread into the Nordic countries and further helped them on their way to recovering from their 78% decrease in value. When you are looking to select an exchange, you want to work with, let this electronic innovator show you why they were ahead of the game in 1971 and why they are strong as ever four decades later. You don’t become the second biggest exchange in the world by falling short of providing great service to the traders and companies they list.