The NASDAQ Stock Market

The NASDAQ, the number one electronic stock exchange in the US, originally was set up by the nation’s organization of Stocks Dealers in 1971.

Its roots can be traced to the 1959s, when fixed backers first started purchasing large amounts of common stock. Instead of pay the high brokerage commission costs of the time, these investors traded big blocks of stock off stock market exchange floor, using brokers who weren’t members of the exchange.

Apart from saving on commissions, these giant investors were making an attempt to avoid moving the market with a big purchase or sell order, therefore expecting to get a more acceptable price. With the deregulation of broker commissions in May 1975, a few of these agents became members of the exchange so they could trade with existing members. In parallel with this development, member firms commenced trading blocks off the exchange floor, subject to the rules of the NYSE.

The NASDAQ was a not-for-profit organization, set up in 1939, It was initially backed jointly by the SEC Commission and the Investment Financiers Meeting , in accordance with the Maloney Act of 1938. In 1998, NASDAQ combined with the AMEX, the New York-based stock exchange that had for years lived in the shade of the NYSE. In July 2007, The NASD’s regulatory functions were mixed with those of the NYSE under a new self-regulatory organization, the Finance Industry Regulatory Authority. NASDAQ lists more corporations than any other major exchange ; its market cap approximately equals that of London and Tokyo, putting them in a virtual three-way tie for 2nd largest equity market ( nor counting Euronext, which subsidiary of NYSE Euronext ). Instinet was an early trailblazer in electronic trading.

Set up in 1969, the pioneered electronic block trading for academic financiers ; offered the 1st quote montage for a U.S.-listed market ; introduced direct market access to U.S. Exchanges ; and pioneered after hours trading. After its 1987 purchase by Reuters PLC, a Brit company, in an antagonistic takeover, Instinet Chairperson Bill Lupien left to form a new alternative trading technique ( ATS ), which ultimately became Optimark Technologies. Though Optimark failed in its aspiring try to transform the character of trading and to make markets better, it electrified a big numbers of imitators ( including Liquidnet and Pipeline ) and an expanding field of algorithmic trading that continues to grow today. Users of ATDs include traders and brokers who work for sell-side firms, which is the Street language for brokers. Sell-side firms use alternative trading systems for shopper accounts and for their own internal trading. Other users are the traders who work for the buy-side hedge funds bosses, allowance fund bosses, and others pro money executives working at banks, insurance corporations, and other sorts of investment firms. What we’ve been talking about up till now is commonly called the secondary stock market today, to distinguish it from the marketplace for instruments that haven’t been formerly sold. These instruments, which include the IPOs of company stock, as well as additional shares a company may issue from time to time, are issued in the first market.

Proceeds from the sale of stock in a first market are divided between the issuer and the underwriters, who receive a commission for presuming some of the chance connected with the new issue and facilitating its sake, either at once or thru dealers.