NASDAQ (National Association of Securities Dealers Automated Quotations)

It is the largest electronic screen-based equity securities trading market in the United States. It was established in 1971 by National Association of Securities Dealers (NASD) and became the first electronic trading floor in the world. The stock exchange’s operator is The Nasdaq Stock Market, Inc. With approximately 3,200 companies, it has more trading volume per hour than any other stock exchange in the world. It operates in New York. It also operates eight stock exchanges in Europe and holds one-third of the Dubai Stock Exchange. It has a double-listing agreement with OMX, and will compete with NYSE-Euronext group in attracting new listings.

NASDAQ came into the world in 1971. At that time the automated system showed average quotes of more than 2500 less-liquid securities which did not have access to New York Stock Exchange (NYSE) and American Stock Exchange (AMEX) which had set up serious listing requirements. The so-called “internal quotes” of securities which represents the best prices of demand and supply have been being displayed since 1980 and it led to substantial decrease in spread. In 1982 the companies which were the first in the listing, separated and established Nasdaq National Market with stricter listing requirements. In 1994 NASDAQ got ahead of NYSE, the largest and most prestigious stock exchange, by average annual volume of the trading. In 1998 NASD became owner of AMEX, the second largest American stock exchange. Finally, in 2002 NASDAQ’s separation from NASD took place and it has become the nonprofit corporation whose participating firms have become its shareholders. In autumn, 2002 SuperMontage trading platform has been launched.

As of today NASDAQ is the most fast-acting securities market in the USA and the world’s second largest in terms of trading volume.

Under The Nasdaq Stock market the trading of more than 4000 securities of American companies is executed. The growing part of the trading belongs to the trading of assets of non-US companies by means of ADR. Except for shares the trading is executed with the whole range of securities and the volume of their trading is not comparable with stock turnover.

NASDAQ quotes are available at three levels:

• Level 1 shows the highest bid and lowest offer — the inside quote.
• Level 2 shows all public quotes of market makers together with information of market makers wishing to sell or buy stock and recently executed orders.
• Level 3 is used by the market makers and allows them to enter their quotes and execute orders.

Trading volume: $10,087 trillion (2005). Listing: 3164 companies (2005).
Capitalization: $3,604 trillion (2006). Profit: $ 61,69 million (2005).

The scheme of trading execution in NASDAQ is different from traditional stock-exchange one. It means that in NASDAQ several market makers compete with each other for a customer’s order execution. Their total number in the organization is about 600 and the main function is steady issue of the quotes and liquidity maintenance of certain group of shares during trading. In other words, when market-maker “makes’ the market on KPTF share, then if there is no opposite order it must execute a customer’s order using its own funds. Some market-makers maintain hundreds of shares in a similar way.

The rules of the trades’ execution and the trades’ settlement are regulated by NASD, Nasdaq and SEC. The trades’ execution is computer-assisted and there are two trading platforms available for traders - ЗSelectNet and SuperMontagew with the services of Primex и Nasdaq InterMarket. Distribution of orders between market-makers is carried out through the system of Liquidity Tracker. Transactions’ execution on over-the-counter market is available through the system of OTCBB (Over-the-Counter Bulletin Board). Unlike InterMarket, this system does not connect with SuperMontage and operates as an independent service.

The main index: NASDAQ Composite represents the state of the shares of all the companies listed at the stock exchange.

NASDAQ has a pre-market session from 07:00am to 09:30am, a normal trading session from 09:30am to 04:00pm and a post-market session from 04:00pm to 08:00pm (all times in EST)

Contacts

Address: One Liberty Plaza, 165 Broadway, New York, NY 10006, United States; tel.: +1 (212) 401 8700, fax: +1 (212) 401 1024; website: http://www.nasdaq.com/, e-mail: isfeedback@nasdaq.com.

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