By George Lyons. NASDAQ is an abbreviation for the National Association of Securities Dealers Automated Quotation system. The world's first electronic.

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Presentation transcript:

By George Lyons

NASDAQ is an abbreviation for the National Association of Securities Dealers Automated Quotation system. The world's first electronic stock market Two separate markets: –The Nasdaq National Market – lists over 4,000 securities –The Nasdaq SmallCap Market – lists over 1,000 securities

History On February 8, Nasdaq begins trading Small Order Execution System (SOES) becomes ready for use to execute small orders Nasdaq surpasses the New York Stock Exchange in annual share volume.

Nasdaq becomes the largest stock market in the U.S. by dollar volume and repeatedly breaks share and dollar volume records Begins to restructure the trading system Nasdaq formally opened the new MarketSite in the heart of New York's Times Square.

Nasdaq MarketSite has a 120 x 90-foot display that is the largest in the world Consists of almost 19-million light-emitting diodes and covers roughly a 10,736-square-foot area, rising more than eight floors. Its not a "flat-panel display," but a cylindrical display that conforms to the curvature of the building at the southest corner of Broadway and west 43rd street.

How a trade is executed No trading floor like the Dow Jones Broadcast to more than 360,000 computer terminals worldwide. All Nasdaq participants equal access to the market

Investor places a Market Order Buy or sell at market price The multiple Market Makers in a Nasdaq stock continuously quote prices at which they will buy and sell the stock The current market price reflects the best of the prices displayed by the multiple market makers- the highest bid (best price to buy) and the lowest ask (best price to sell) of all the market maker quotes.

The investor could call a broker and they would purchase the stock at the best bid price OR The investor could use an on-line trading account to place an order electronically. The trade is then executed by a Market Maker or an ECN (Electronic Communications Networks) at the current best price

Other types of trades: Limit Order - investor sets the price at which to buy. When price falls to the investor’s ask price, trade automatically occurs. Short Selling – Market Makers sell shares to an investor or another Market Maker without having the shares in his or her trading account. Used in anticipation of a market down-turn.