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NASDAQ Exchange Description
What Makes Nasdaq
Unique?
As the world's largest electronic stock market, Nasdaq® is not limited
to one central trading location. Rather, trading is executed through
Nasdaq's sophisticated computer and telecommunications network, which
transmits real-time quote and trade data to more than 1.3 million users
in 83 countries. Without size limitations or geographical boundaries,
Nasdaq's "open architecture" market structure allows a virtually
unlimited number of participants to trade in a company's stock.
Today, Nasdaq lists
the securities of nearly 4,100 of the world's leading companies and
each year, continues to help hundreds of companies successfully make
the transition to public ownership.
Who Trades Nasdaq Stocks?
Trading on Nasdaq is not limited to any fixed number of participants.
This allows a large number of firms with widely different business models
and trading technologies to connect to the Nasdaq network and compete
on an equal basis. Rather than forcing investors to go through a single
financial firm to buy or sell stocks, Nasdaq links up a variety of competitors
and lets participants choose with whom they are going to trade. All
firms trading Nasdaq stocks must be certified with the Securities and
Exchange Commission (SEC) and registered with Nasdaq and NASD Regulation®.
Following are examples of the kinds of firms trading Nasdaq stocks:
- Market Makers
Key to Nasdaq's market structure are a core group of financial firms
called market makers. More than 500 market making firms trade on Nasdaq,
acting as distributors for Nasdaq-listed securities. Also known as
dealers, market makers are unique in that they commit their own capital
to Nasdaq-listed securities — then turn around and re-distribute the
stock as needed. They are required at all times to post their bid
and ask prices in the Nasdaq network where they can be viewed and
accessed by all participants. By being willing to buy or sell stock
using their own funds, market makers add liquidity to Nasdaq's market,
ensure that there are always buyers and sellers for Nasdaq-listed
securities, and enable trades to be filled quickly and efficiently.
- ECNs
In addition to market makers, the Nasdaq network also connects alternative
trading systems into the market, such as electronic communication
networks (ECNs). ECNs provide electronic facilities that investors
can use to trade directly with each other. As Nasdaq market participants,
ECNs display either one-sided or two-sided quotes that reflect actual
orders. Additionally, they provide investors with an anonymous way
to enter orders into the marketplace. Unlike market makers, ECNs operate
simply as order-matching mechanisms and do not maintain inventories
of their own.
- Order-Entry
Firms
Order-entry firms are also Nasdaq market participants. Order-entry
firms enter and execute orders through Nasdaq on behalf of retail
and institutional customers and other broker/dealers, but they do
not maintain buy or sell price quotations in Nasdaq-listed securities.
Like ECNs, order-entry firms do not commit capital to stocks, but
they do increase the competition among market participants — helping
to keep stock prices competitive and adding to the market's liquidity.
- Related Links:
Nasdaq MarketWatch
How Does Nasdaq's Market
Structure Benefit Listed Companies?
Through its unique framework of multiple market participants, Nasdaq
provides listed companies' securities with ready access to investors,
visibility in the marketplace, and market conditions that promote immediate
and continuous trading:
- Liquidity
Liquidity is best defined as the ease with which stocks can be bought
and sold in the market. By encouraging trading among a virtually unlimited
number of market participants, Nasdaq offers an environment that facilitates
greater liquidity.
- Depth of Market
Depth of market refers to the total amount of money market makers
have invested in a single security and is related to the number of
market participants trading in the security. However, even a few market
participants can provide abundant depth of market by committing to
buy or sell large quantities of a security. Knowing there is depth
of market can reassure investors of a stock's marketability, especially
during periods of heavy trading volume.
- Transparency
Transparency, the ability to view investors' buy and sell orders at
different price levels, is crucial to the decision-making process
in securities trading. Nasdaq's open market structure offers a level
of transparency not found on other major U.S. markets. On Nasdaq,
all bid and ask quotations in a given security are broadcast over
the network. All Nasdaq market participants — regardless of whether
they are professional traders — can see the same information.
- Price Efficiency
In securities trading, as in most industries, competition is one of
the most important factors in creating price efficiencies. The aggressive
competition for orders fostered among Nasdaq's market participants
helps to ensure that investors receive the best prices for the securities
they trade.
nasdaq.com
nasdaq.com is one of the most popular financial sites on the Web. Averaging
more than seven million page views per day, nasdaq.com offers unprecedented
visibility to listed companies. Investors can log on to nasdaq.com and
see how Nasdaq, Dow Jones, and the S&P 500 are performing, scan
the latest news and fund commentary and get quotes for stocks, mutual
funds, and options on major U.S. markets. With a wealth of investor
services, users are encouraged to visit the following links for an overview
of the site or to view the services available.
Nasdaq MarketSiteS
Located in the heart of New York's Times Square, Nasdaq's MarketSite
Tower soars seven stories high and is the largest video screen in the
world. CNBC, CNNfn, Bloomberg, CBS MarketWatch — these and other financial
news media broadcast live throughout the day from the MarketSite's Broadcast
Studio, putting Nasdaq listed companies front and center before millions
of investors. Take a peek — view the action from the MarketSiteSM
live webcam.
-
Unparalleled Service
Companies can expect unparalleled service when they list on Nasdaq.
Each Nasdaq company has a single point of contact: their Nasdaq Director,
who serves as a link to an extensive portfolio of services. Directors
provide day-to-day assistance and can offer valuable insight on investor
relations, market and industry issues.
Executive Programs
Nasdaq-listed company executives are invited to participate in a variety
of programs designed to present top managers with timely information
and networking opportunities. Nasdaq programs include a wide range of
topics — such as industry sector specific seminars and investor relations
forums — that provide companies with the tools they need to be public.
Nasdaq Online
Designed for senior executives at Nasdaq listed companies, Nasdaq Online
is a one-of-a-kind strategic planning tool. It provides market data
on all US-traded companies and real-time quotes for Nasdaq stocks. Plus,
there's key information on institutional ownership, research coverage,
performance ratios and more. All data is continually updated and available
in a single, integrated source. And Nasdaq Online is free to listed
companies.
Global Vision
Nasdaq is building the world's first truly global stock market — digital
and Internet-accessible, open to anyone anywhere in the world, 24 hours
a day. Nasdaq has already broken new ground in
Japan,
Europe, Hong
Kong, and Canada
, with additional plans for Asia, Latin America, and the Middle East.
By reaching out around the globe, Nasdaq is creating new links to additional
capital and an even broader pool of investors.
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