The Nasdaq Stock Market
NASDAQ (originally an acronym for National Association of Securities Dealers Automated Quotations) is an American electronic stock exchange. It was founded by the National Association of Securities Dealers (NASD) who divested it in a series of sales in 2000 and 2001. It is owned and operated by The Nasdaq Stock Market, Inc. (NASDAQ: NDAQ) which was listed on its own stock exchange in 2002. The current chief executive is Robert Greifeld.
When it began trading on February 8, 1971, it was the world's first electronic stock market. NASDAQ is now the largest U.S. electronic stock market. With approximately 3,200 companies, it lists more companies and, on average, trades more shares per day than any other U.S. market. It is home to companies that are leaders across all areas of business including technology, retail, communications, financial services, transportation, media and biotechnology. NASDAQ is the primary market for trading NASDAQ-listed stocks. For more information about NASDAQ, visit the NASDAQ Web site at http://www.nasdaq.com or the NASDAQ Newsroom at http://www.nasdaq.com/newsroom/.
NASDAQ allows multiple market participants to trade through its electronic communications networks (ECNs) structure, increasing competition. The Small Order Execution System (SOES) is another NASDAQ feature, introduced in 1984, to ensure that in 'turbulent' market conditions small market orders are not forgotten but are automatically processed. On July 17, 1995 the NASDAQ stock index closed above the 1,000 mark for the first time. The index peaked at 5132.52 on March 10, 2000, which signaled the beginning of the end of the dot-com boom.
NASDAQ® is a publicly traded company that runs the premier electronic stock market in the U.S., home to over 3,200 leading companies across every industry in 2005. A world-renowned market and world-class competitor, NASDAQ is supported by diversified business lines with the goal of providing exceptional value to the marketplace and significant opportunities to the company with the highest regulatory integrity.
- NATIONAL ASSOCIATION OF SEC. DEALERS INC.: 30%
- NASDAQ National Market
- NASDAQ SmallCap Market
Indices of The Nasdaq Stock Market
The following common type securities are eligible for index inclusions. There is no distinction between either the NASDAQ National Market vs. the NASDAQ SmallCap Market, or domestic US vs. Non-US securities.
American Depositary Receipts (ADRs) Common Limited Partnership Interests Ordinary Shares Real Estate Investment Trusts (REITs) Shares of Beneficial Interest (SBIs) Tracking Stocks
The following issue types are not eligible for inclusion in the indices: closed-end funds, convertible debentures, exchange traded funds, preferred stocks, rights, warrants, units and other derivative securities.
The NASDAQ-100 Index includes 100 of the largest domestic and international non-financial companies listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies including investment companies. The NASDAQ-100 Index is calculated under a modified capitalization-weighted methodology.
On January 31, 1985, the NASDAQ-100 Index began with a base of 250.00. On January 1, 1994, the NASDAQ-100 base was reset by division of a factor of 2.00 to 125.00.
NASDAQ Financial-100 Index
The NASDAQ Financial-100 Index includes 100 of the largest domestic and international financial companies listed on The NASDAQ Stock Market based on market capitalization. They include companies classified by the FTSE Global Classification System as Financials, which are included within the NASDAQ Bank, Insurance and Other Finance Indexes.
On January 31, 1985, the NASDAQ Financial-100 Index began with a base of 250.00.
NASDAQ Composite Index
The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market.
Today the NASDAQ Composite includes over 3,000 companies, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices.
On February 5, 1971, the NASDAQ Composite Index began with a base of 100.00.
NASDAQ National Market Composite Index
The NASDAQ National Market Composite Index is a sub-set of the NASDAQ Composite Index, and consists of all companies included in the NASDAQ Composite Index which are listed on the NASDAQ National Market tier of The Nasdaq Stock Market.
On July 10, 1984 the NASDAQ National Market Composite Index began with a base of 100.00.
NASDAQ Bank Index
The NASDAQ Bank Index contains NASDAQ listed companies classified according to the FTSE Global Classification System as Banks. They include banks providing a broad range of financial services, with significant retail banking and money transmission.
On February 5, 1971, the NASDAQ Bank Index began with a base of 100.00.
NASDAQ Biotechnology Index
The NASDAQ Biotechnology Index contains companies that are classified according to the FTSE Global Classification System as either biotechnology or pharmaceutical which also meet other eligibility criteria. The NASDAQ Biotechnology Index is calculated under a modified capitalization-weighted methodology.
On November 1, 1993, the NASDAQ Biotechnology Index began with a base of 200.00.
NASDAQ Computer Index
The NASDAQ Computer Index contains NASDAQ listed companies classified according to the FTSE Global Classification System as Computer Hardware, Semiconductors, and Software & Computer Services. They include firms that manufacture and distribute computers and associated electronic data processing equipment and accessories, semiconductor capital equipment, manufacturers and distributors of wafers and chips, providers of computer services and IT consultants, Internet access providers, internet software and on-line service providers, and producers and distributors of computer software.
On November 1, 1993, the NASDAQ Computer Index began with a base of 200.00.
NASDAQ Industrial Index
The NASDAQ Industrial Index contains NASDAQ listed companies not classified in one of the NASDAQ sector Indexes. These include firms that are involved in mining, oil and gas, chemicals, construction and building materials, forestry and paper, steel and other metals, aerospace and defense, diversified industrials, electronic and electrical equipment, engineering and machinery, automobiles and parts, household goods and textiles, beverages, food producers and processors, health, personal care and household products, tobacco, general retailers, leisure and hotels, media agencies, photography, publishing and printing, support services, food and drug retailers, electricity, utilities, and biotechnology and pharmaceutical firms not included in the NASDAQ Biotechnology Index.
On February 5, 1971, the NASDAQ Industrial Index began with a base of 100.00.
NASDAQ National Market Industrial Index
The NASDAQ National Market Industrial Index is a sub-set of the NASDAQ Industrial Index, and consists of all companies included in the NASDAQ Industrial Index which are listed on the NASDAQ National Market tier of The Nasdaq Stock Market.
On July 10, 1984 the NASDAQ National Market Industrial Index began with a base of 100.00.
NASDAQ Insurance Index
The NASDAQ Insurance Index contains NASDAQ listed companies classified according to the FTSE Global Classification System as Insurance or Life Assurance. They include insurance brokers, non-life insurance, re-insurance, other insurance, and life assurance.
On February 5, 1971, the NASDAQ Insurance Index began with a base of 100.00.
NASDAQ Other Finance Index
The NASDAQ Other Finance Index contains NASDAQ listed companies classified according to the FTSE Global Classification System as Investment Companies, Real Estate, Specialty and Other Finance, or Investment Entities. They include real estate holding and development, property agencies, asset managers, consumer finance, investment banks, mortgage finance, other finance including financial holding companies, security and commodity exchanges, and other financial companies.
On February 5, 1971, the NASDAQ Other Finance Index began with a base of 100.00.
NASDAQ Telecommunications Index
The NASDAQ Telecommunications Index contains NASDAQ listed companies classified according to the FTSE Global Classification System as Television, Radio & Filmed Entertainment, Subscription Entertainment Networks, and Telecommunications Services and Equipment. They include independent radio and television contractors, film production, providers of television, media services and programming facilities including those driven by subscription, operators of wireless and fixed-line telecommunication services, and manufacturers and distributors of digital equipment used in telecommunication.
On November 1, 1993, the NASDAQ Utility Index was renamed the NASDAQ Telecommunications Index. The former NASDAQ Utility Index was reset to a base of 200.00, using a factor of 5.74805.
NASDAQ Transportation Index
The NASDAQ Transportation Index contains NASDAQ listed companies classified according to the FTSE Global Classification System as Transport. They include firms that provide air, rail, road, freight, and water transport and their related facilities and services.
On February 5, 1971, the NASDAQ Transportation Index began with a base of 100.00.
NASDAQ Index Calculation Description
All NASDAQ Indices are market value weighted except the NASDAQ-100 Index which is weighted using a modified market capitalization method. The representation of each security in the Index is proportional to its last sale price times the total number of shares outstanding, relative to the total market value of the respective index.
The formula used for determining the Index values is as follows:
Index Level = Current Market Value
Adjusted Base Period Market Value X Base Value
Adjusted Base Period Market Value = Current Market Value After Adjustments
Current Market Value Before Adjustments X Previous Base Period Market Value
The level of an Index will only change as a result of price changes occurring between the opening and closing of the market. Adjustments for securities being added to or deleted from The Nasdaq Stock Market, Inc., or capitalization changes, are adjustments which take place during the system maintenance process which occurs after the market has closed. These adjustments will result in value changes to the current market value and adjusted base period market value, but will not in and of themselves alter the level of an Index.
Stock splits and stock dividends are likewise adjusted for during the system maintenance process. However, the system makes a price adjustment to account for the increased number of shares with the result being that the current market value does not change. As an example, assume that ABC Corp. has 1,000,000 shares outstanding with a last sale price of 20 (market value – $20,000,000) The company has declared a 2 for 1 stock split. During system maintenance on the day prior to the effective date of the split, the system will adjust the shares outstanding to 2,000,000 and will correspondingly adjust the price to 10. Result, the same current market value of $20,000,000.
In the case of cash dividends, no system adjustment is made. Neither the Current Market Value nor the Adjusted Base Period Market Value is adjusted to reflect cash dividends. The index formula relies on market forces to determine the level of the Index.
America's Community Bankers NASDAQ Index
The America's Community Bankers NASDAQ IndexSM is a market-value weighted total return index made up of a broad diversity of community based financial institutions. Unlike other NASDAQ indexes, the America's Community Bankers NASDAQ Index is calculated once a day as a total return index, which means that companies' dividends will be reinvested and included in the index value. The eligibility criteria and constituents of the America's Community Bankers NASDAQ Index are provided by America's Community Bankers (ACB). For further details, please visit the America's Community Bankers Web Site.