When Did NASDAQ Start?
Well, if you trade stocks or are just interested in keeping up on the economy then the NASDAQ is something you should be watching. The NASDAQ is an electronic stock exchange. Market makers do all trading on the NASDAQ. These "market makers" are nothing more than stockbrokers or security companies that act as brokers or dealers of a specific security.
This novel approach to buying and selling stocks opened its doors, so to speak, on February 8, 1971. Its advertising campaign touted it as being the stock exchange of the next hundred years.
It reached a trading volume of 1000 in 1995. There are now about 3700 companies and corporations listed on the NASDAQ. One of the unique traits of the NASDAQ is that it only trades OTC (over-the-counter) stocks. It was the first computerized stock exchange and is still, as of 2010, the largest.
The Beginnings
The beginnings of the NASDAQ were slow and during the 70's and 80's it was questionable as to whether it would ever make it big. Most companies that had been listed on the NASDAQ would shift to the NYSE (New York Stock Exchange) once they had become large enough to trade on the NYSE.
This trend of switching to the NYSE slowed in the 90's as big names in the stock market kept their place on the NASDAQ. Some of the companies that remained listed on the NASDAQ even after making it big included Microsoft, Dell, Cisco and Intel. The general public began to take an interest in what was happening on the NASDAQ.
What Is the NASDAQ?
The NASDAQ is very different from the typical stock exchange where many people crowd into a central room with electronic feeds providing information to the buyers and sellers about all the listed stocks on the market.
The pictures we have all seen of people running around from place to place within the stock exchange and yelling to various masses of people taking bids and selling amounts of stock is far different than what occurs on the NASDAQ. The NASDAQ is an electronic network of sellers and buyers of securities that are part of the NASDAQ exchange. Through the electronic network, buyers and sellers are able to trade stock by simply entering information on a computer system that tracks the trades.
The NASDAQ Index
When did NASDAQ start measuring its activity with an index? The NASDAQ is called a weighted stock exchange. As with other exchanges, the trading volumes are a measure of what the economy is doing.
The index reports a general overall measure of the activity on the NASDAQ and has been reported since the beginnings of the stock exchange. The weighting of the index is disparate.
On the NASDAQ, the index is based on all the stocks but over 50 percent of the weight of the index is based on 1 percent of the companies listed. Each of the 1 percent is a technology company. Therefore, when the NASDAQ index rises or drops sharply, it is probably only the result of the activity in a handful of companies.
The NYSE Versus the NASDAQ
One unique feature of the NASDAQ is that due to the electronic and computer based trading scheme, there are over 1.3 million computers connected from over 83 countries around the world. The NASDAQ became the largest stock exchange in the U.S. defined by volume traded in 1999.
While the NYSE is a busy environment used to accomplish the trading of stocks and securities, it is a very different model than the NASDAQ. There are markets around the world based on the model of the NYSE's bid-and-ask-system, which was a standard for a long time. Despite the popularity of the NYSE model, deals on the NASDAQ and other electronic exchanges continue to grow.
When did NASDAQ start operating on a scale larger than the United States? In 1992, the NASDAQ merged with the London Stock Exchange, forming the first intercontinental exchange.
The American Stock Exchange then merged with NASDAQ in 1998 to form the largest exchange in the U.S. One of the latest acquisitions of NASDAQ was the Philadelphia Stock Exchange. The Philadelphia Stock Exchange is the oldest exchange in the nation, having begun in 1790.