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Finance Dictionary and Glossary of Investment Terms
Created in 1971, the Nasdaq was the world's first electronic stock market. The Nasdaq is a computerized system that facilitates trading and provides price quotations on some 5,000 of the more actively traded over-the-counter stocks.
See: National Association of Securities Dealers Automatic Quotation System
A computerized system established by the NASD to facilitate trading by providing broker/dealers with current bid and ask price quotes on over-the-counter stocks and some listed stocks. Unlike the Amex and the NYSE, the Nasdaq (once an acronym for the National Association of securities Dealers Automated Quotation system) does not have a physical trading floor that brings together buyers and sellers. Instead, all trading on the Nasdaq exchange is done over a network of computers and telephones. Also, the Nasdaq does not employ market specialists to buy unfilled orders like the NYSE does. The Nasdaq began when brokers started informally trading via telephone; the network was later formalized and linked by computer in the early 1970s. In 1998 the parent company of the Nasdaq purchased the Amex, although the two continue to operate separately. Orders for stock are sent out electronically on the Nasdaq, where market makers list their buy and sell prices. Once a price is agreed upon, the transaction is executed electronically.
Nasdaq (National Association of Securities Dealers Automated Quotation System) is the electronic stock exchange run by the National Association of Securities Dealers for over-the-counter trading. Established in 1971, it is America''s fastest growing stock market and a leader in trading foreign securities and technology shares as well. It boasts many more listed companies than the New York Stock Exchange, and handles more than half the stock trading that occurs in this country. Rather than a trading floor like that of the NYSE, Nasdaq relies entirely on a computerized trading system that enables dealers, regardless of location, to bid on orders. Theoretically this should result in the most efficient possible market, but this hasn''t been the case in fact. On traditional exchanges buyers and sellers meet directly -- that is, brokers representing investors on each side of the transaction come together on price. But Nasdaq uses market makers who trade for their own account and profit on the spread between bid and ask prices. In 1996 the SEC issued a scathing report citing various abuses on the exchange, including excessively wide bid-ask spreads, collusion among dealers, and other manipulations. NASD, without admitting guilt, agreed to be censured and to initiate reforms.Although once the province of smaller companies, Nasdaq today is where many leading companies are traded, including Microsoft, Intel, MCI, Amgen, Cisco Systems, Nordstrom, Oracle, McCormick, SAFECO Insurance, Sun Microsystems, T. Rowe Price, Tyson Foods and Northwest Airlines.
The National Association of Securities Dealers Automated Quotation system. (See National Association of Securities Dealers, Inc.)