NASDAQ
NASDAQ, the National Association of Securities Dealers Automated Quotations system, is an American Stock Market founded in the year 1971 by the National Association of Securities Dealers. It is the largest Electronic stock market where orders for the stock are sent electronically and once a price is agreed upon the transaction is made. The network traffic is controlled by a Market Maker who competes for the customer by displaying the quotations.
Features of NASDAQ:
ECN (Electronic Communication Network): The feature allows unlimited participants to trade a company’s share thus increasing competition.
SOES (Small Order Execution System): ensures that changes in market condition are processed electronically.
The 3 levels in which NASDAQ quotes its prices to public:
Level I: Here, the person asking for the stock or doing the bid is not disclosed.
Level II: It gives the name of the market maker looking for the stocks.
Level III: This allows asking quotes or entering bid as the process is going on.
The NASDAQ 100 index comprises of the 100 most actively traded domestic and international companies in diverse fields like: hardware, software and telecommunications but not the finance industry. The NASDAQ composite index has seen an extraordinary growth during the 1990’s period but also an equally rapid downfall due to the dotcom crash.