NASDAQ

NASDAQ was founded in 1971 by the National Association of Securities Dealers (NASD), the predecessor to FINRA, as the world's first computerized trading system for over-the-counter securities. Its fully electronic architecture was revolutionary at the time, enabling faster and more efficient price discovery compared to traditional floor-based exchanges. Today, NASDAQ is home to some of the most valuable companies in the world, including Apple, Microsoft, Amazon, Alphabet (Google), Meta Platforms, and Tesla.

Unlike the NYSE, which retains designated market makers on a physical floor, NASDAQ operates entirely through a network of competing market makers — broker-dealers who post continuous bid and ask prices for the securities they cover. This competitive dealer model was designed to tighten spreads and improve pricing for investors. FINRA oversees broker-dealer conduct on NASDAQ, while the SEC provides broader regulatory oversight of the exchange itself.

The NASDAQ stock market is segmented into three tiers: the NASDAQ Global Select Market (the most prestigious, with the strictest listing standards), the NASDAQ Global Market, and the NASDAQ Capital Market (designed for smaller-cap companies). A company's tier determines the financial and governance thresholds it must maintain to remain listed. During the dot-com bubble of the late 1990s and early 2000s, NASDAQ listing standards became a subject of scrutiny as many technology companies with no earnings and minimal revenue achieved multi-billion dollar valuations before collapsing in 2000-2001.

NASDAQ's regular trading session also runs from 9:30 a.m. to 4:00 p.m. Eastern Time. Like the NYSE, NASDAQ offers pre-market and after-hours trading sessions, though liquidity is generally lower outside regular hours. The NASDAQ market is closely followed by investors worldwide, and its performance is often used as a barometer of the U.S. technology sector. NASDAQ also operates the NASDAQ Composite Index and the NASDAQ-100, both widely tracked benchmarks.

For educational purposes, it is worth noting that while NASDAQ is strongly associated with technology, it lists companies across virtually all industries. Many biotech, financial, and consumer companies also trade on NASDAQ. The exchange's brand has become synonymous with innovation-driven growth companies, and a NASDAQ listing is often pursued by high-growth firms seeking access to the deep capital pool of U.S. equity markets.

How NASDAQ Changed the Game: NASDAQ's founding in 1971 was not merely the launch of a new trading venue — it represented a philosophical challenge to the way financial markets had operated for centuries. Traditional exchanges like the NYSE were physical places where human specialists held near-monopolistic control over price-setting in their assigned stocks, often earning wide bid-ask spreads at the expense of investors. NASDAQ's electronic, multi-dealer model introduced genuine competition into the market-making process: because multiple broker-dealers were required to post competing quotes, investors could see the best available prices across all market makers simultaneously, and spreads were structurally compressed over time. This model proved so successful that the NYSE itself was eventually forced to adopt electronic trading and reduce the role of specialists. NASDAQ's influence extended beyond its own exchange — the principles of electronic, competitive market-making that it pioneered became the template for modern equity market structure globally. The exchange's decision to list Apple in 1980 at its IPO, and to retain Microsoft when it went public in 1986 and Amazon in 1997, was transformative: these three companies collectively grew into the most valuable corporations in American history while remaining NASDAQ-listed. This track record established NASDAQ as the exchange of choice for technology-driven companies, a reputation that continues to attract high-growth enterprises today. The NASDAQ IPO process, including its dual listing tier structure and the absence of a physical specialist requirement, is frequently cited by founders and CFOs as a logistically simpler path to public markets compared to the NYSE's more ceremonially traditional listing process.

NASDAQ Market Tiers: The NASDAQ stock market is divided into three distinct listing tiers, each with its own financial and governance requirements. The NASDAQ Global Select Market is the most prestigious tier and imposes the most stringent listing criteria in the world, including minimum market capitalization thresholds well above $100 million, strict earnings or cash flow requirements, high liquidity standards, and comprehensive corporate governance rules. Companies like Apple, Microsoft, Amazon, and Meta Platforms are listed on the Global Select Market. The NASDAQ Global Market is the middle tier, designed for mid-cap companies that meet substantial but less demanding financial and governance requirements. The NASDAQ Capital Market is the entry-level tier, providing smaller companies with access to public capital markets while maintaining a regulated framework that offers greater investor protection than OTC markets. Companies can move between tiers as their financial profiles evolve — a company that grows its market capitalization and earnings track record can upgrade from the Capital Market to the Global Select Market, signaling increasing corporate maturity. Conversely, companies that fail to maintain the financial standards of their current tier face transfer down to a lower tier or potential delisting proceedings.

NASDAQ 100 vs NASDAQ Composite: While the NASDAQ Composite tracks virtually every security listed on the NASDAQ exchange — more than 3,000 stocks — the NASDAQ-100 is a curated subset that includes only the 100 largest non-financial companies listed on NASDAQ, rebalanced annually. The NASDAQ-100 is the basis for some of the most heavily traded financial products in the world, including the Invesco QQQ Trust (ticker: QQQ), which is among the highest-volume ETFs in U.S. markets. Because the NASDAQ-100 excludes financial companies — banks, insurance firms, REITs — its composition is heavily skewed toward technology, consumer discretionary, and healthcare, making it an even purer proxy for the growth and technology sectors than the broader Composite. When investors and financial media refer to 'the NASDAQ' in the context of daily market moves, they are often referencing the NASDAQ-100 or the QQQ rather than the full Composite. The differences in performance between the two can be substantial: during periods when mega-cap technology outperforms smaller-cap NASDAQ-listed companies, the NASDAQ-100 can dramatically exceed the Composite's returns, while during technology corrections the NASDAQ-100 often declines more sharply.