Nasdaq is an electronic and automated stock market, in which the securities of companies related to cutting-edge technologies are traded. By extension, Nasdaq is used to refer to a stock index (NASDAQ Composite Index - ^ IXIC) that measures the behavior of shares that are traded on the market of the same name.
What is Nasdaq
NASDAQ: National Association of Securities Dealers Automated Quotation (www.nasdaq.com). Automated Quotation System of the National Association of Securities Dealers.
It is the largest electronic stock market in the world. (Szyliowicz, Nelson and Kennedy, p.229)
It is a decentralized transactional network of brokers and an automated quote execution system. (Mizrach, p.471)
It is an important segment of the secondary market that uses a fully electronic trading platform to carry out transactions. (Gittman and Joehnk, p.37)
Background
It was created in 1971 to give transparency and security to the operations of the OTC (Over the Counter Market) market, providing information in real time to thousands of investors and stockbrokers. Its success and development have been so remarkable that it is currently the third stock exchange in the world. In 2006, the SEC (Securities and Exchange Commission) formally recognized Nasdaq as a “listed stock market,” giving it almost the same importance and prestige as the New York Stock Exchange.
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According to Brull (p.89), his work vision is to facilitate capital formation in both the public and private sectors by developing, operating and regulating the most liquid, efficient and reliable existing stock market. His vision is to build the world's first global stock market. A world market of markets within a network of networks, linking liquidity poles and connecting investors from all over the globe, ensuring the best possible price for securities at the lowest possible cost.
Nasdaq Benefits for Businesses
Brull (p.91) indicates that through its multi-participant market operating framework, Nasdaq provides company securities with immediate access to investors, market visibility and conditions that promote immediate and continuous trading:
- Liquidity: Liquidity is defined as the ease with which shares can be bought and sold in the market. Nasdaq creates the environment for high liquidity. Market depth: Refers to the total amount of money that market makers have invested in a single security and is related to the number of participants trading in the security. However, even a small group of market participants can provide abundant depth, committing to buy or sell large amounts of a security. Knowing that there is market depth can assure investors of the "marketability" of stocks, especially during high transaction levels. Transparency: The ability of the investor to buy and sell at different price levels,it is crucial in the decision-making process. Nasdaq's level of transparency is unmatched, as all prices are broadcast over the network; thus, all market participants can see the same information. Price efficiency: In the transaction of securities, as in many other industries, competition is one of the most important factors. The aggressive competition promoted through the Nasdaq by market participants helps to ensure that the investor receives the best prices for the securities they trade.competition is one of the most important factors. The aggressive competition promoted through the Nasdaq by market participants helps to ensure that the investor receives the best prices for the securities they trade.competition is one of the most important factors. The aggressive competition promoted through the Nasdaq by market participants helps to ensure that the investor receives the best prices for the securities they trade.
Behavior
Here is a graph with the recent behavior of the NASDAQ Composite Index:
NDAQ chart by TradingViewBibliography
- Brull, Hugo Rodolfo. The global capital market within everyone's reach. Dunken Publisher, 2007 Gitman, Lawrence J. and Joehnk, Michael. Investment fundamentals. Pearson Education, 2009. Mizrach, Bruce. Does size matter? Liquidity provision by tehe Nasdaq anonymous trading facilities. In: Competition and regulation in Network Industries, Vol. 1, No.4, 2006.Szyliowicz, Dara; Nelson, Teresa and Kennedy, Kevin H. Shaping of strategic behavior: global practices of listing on the US Nasdaq Stock Exchange. In: Competition & Change, Vol. 7, No. 4, December 2003, pp. 223-240.
