What is NASDAQ U.S. Stock Exchange? Information you may not know about NASDAQ
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It is impossible not to mention Nasdaq when it comes to US stock exchanges. What’s outstanding about the US stock exchange NASDAQ becoming so famous worldwide? The following article learns about the NASDAQ exchange and all the information you need to know about this exchange.
What is NASDAQ U.S. Stock Exchange?
NASDAQ is an abbreviation of the phrase National Association of Securities Dealers Automated Quotations System. NASDAQ is one of the major stock exchanges in the US. The NASDAQ exchange is globally famous with the second-largest market capitalization in the US, just behind the NYSE stock exchange. Currently, NASDAQ’s daily trading volume is leading worldwide.
Nasdaq is the world’s first electronic stock exchange. The critical difference between NASDAQ and other major stock exchanges is an over-the-counter (OTC) stock exchange. Nasdaq is headquartered in the US and currently allows trading on 29 global stock markets. Most of the world’s top tech stocks are listed on Nasdaq. In addition, NASDAQ-traded stocks also belong to various fields such as Finance, Healthcare, Energy, Consumer Goods, Public Works, Transportation, and Technology….
Nasdaq’s official website is https://www.nasdaq.com/.
NASDAQ also lists its stock under the ticker NDAQ and has been part of the S&P 500 Index since 2008.
The NASDAQ Composite Index is built based on the share prices of all companies listed on the NASDAQ. The NASDAQ Composite is often referred to as the NASDAQ index. The NASDAQ index is today a widely quoted representative of the world.
Investors should distinguish it from the NASDAQ 100. The NASDAQ 100 is an extract of the top 100 non-financial companies and is considered the most-watched index for technology companies.
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History and outstanding milestones of the NASDAQ exchange
NASDAQ was founded in 1971 by the National Association of Securities Traders (NASD) and is currently operated by Nasdaq Stock Market, Inc.
In 1987, most trading was conducted by phone, but market makers hardly answered the phone during the stock market crash of 1987. Nasdaq comes after the Securities and Exchange Commission (SEC) urged NASD to automate the market for securities not listed on an exchange.
When it was first established, NASDAQ was simply a system listing stock prices. It adjusts the difference between the bid and asks prices. After one time, it trades between participants and becomes a stock exchange.
Nasdaq officially separated from NASD and began operating as a national stock exchange in 2006. In 2008, it merged with Scandinavian exchange group OMX to become Nasdaq OMX Group. The company changed its name to Nasdaq Inc. (NDAQ) in 2015.
In 2019, NASDAQ rose to become the most prominent electronic stock exchange in the US.
Conditions for a company to be listed on NASDAQ
Unlike other stock exchanges in the US, companies listed on the NASDAQ are often targeted for growth rather than large-scale companies. In addition, the cost to list on Nasdaq is cheaper than other stock exchanges, which is also a criterion that makes many companies choose NASDAQ. The listing fee at NASDAQ is only 150000 USD.
Companies need to meet specific financial criteria to be listed on the NASDAQ stock exchange. These criteria are divided into four categories, including income, equity, market value, and total asset value/total revenue.
Suppose a company is listed based on income criteria. In that case, the company must have income before tax of the previous year or payment of any two years in the last three years greater than 1 million USD with total shareholder equity reaching 15 million USD.
If a business wants to list under equity valuation, the requirements are higher for shareholders owning at least 30 million USD.
The company can also select evaluation criteria based on total market value with a minimum standard of 75 million USD.
In addition, if a company that meets the criteria of total asset value or the total income of the previous year or payment of any two years in the last three years must be over 75 million USD, it is also selected to list on the exchange Nasdaq.
During the approval process for listing on Nasdaq, some other conditions are as follows: The minimum percentage of shares held by the public must be 1.1 million shares, with the total market value of public shares at $8 million, $18, or $20 million. In particular, the company must ensure its shares are trading at over $4 for at least 90 days before applying for listing.
In addition, for small companies that cannot meet the financial requirements of NASDAQ, there is an exchange dedicated to them, the NASDAQ Small Caps Market. NASDAQ will move companies from one market to another as eligibility changes.
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Above is some vital information associated with the US stock exchange NASDAQ. Nasdaq is a decentralized stock exchange. The Nasdaq serves as a trader’s marketplace for brokers to buy and sell stocks through dealers, not directly with each other. Since its inception, Nasdaq has proven itself as the leader of an electronic stock exchange, becoming the largest exchange in the United States by trading volume and the second-largest globally. It is where the leading technology stocks in the world gather.
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