NASDAQ
Also known as: National Association of Securities Dealers Automated Quotations
The NASDAQ is a fully electronic U.S. stock market where competing market makers post quotes and trade listed securities. It is one of the world's largest exchanges and is known for its heavy concentration of technology companies.
The NASDAQ (originally the National Association of Securities Dealers Automated Quotations) is an all-electronic securities exchange. Launched in 1971 as the world's first electronic stock market, it has no physical trading floor — all orders are matched through its computer systems.
Structurally, the NASDAQ is a negotiated (dealer) market. Rather than routing trades through a single designated market maker the way the NYSE does, each NASDAQ security has multiple competing market makers, each posting bid and ask quotes and profiting from the spread. Competition among these dealers is what keeps quoted spreads tight for actively traded stocks.
NASDAQ-listed companies must meet listing standards for share price, market value, and corporate governance, organized into three tiers: the Global Select Market (the most stringent), the Global Market, and the Capital Market. Securities that don't meet exchange listing standards trade instead in the over-the-counter market on venues like OTC Markets. Market participants can access NASDAQ quote data at different depth levels — from basic inside quotes up to the full display of every market maker's quotes.
The Series 7, Series 65, and Series 66 exams all test the NASDAQ's structure — expect questions contrasting its competing market maker system with the NYSE's auction model, and identifying which securities trade on the exchange versus over the counter.
Key takeaways
- The NASDAQ is a fully electronic exchange with no physical trading floor, founded in 1971.
- It operates as a negotiated dealer market with multiple competing market makers per security, unlike the NYSE's auction model.
- Listing tiers run from the Global Select Market (strictest standards) down to the Capital Market.
- Securities that fail to meet listing standards trade over the counter, not on the NASDAQ.