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Figure 10.1
Making Trades Happen |
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The National Association of Securities Dealers Automated Quotation System is better known as Nasdaq. It arose from quite humble beginnings. |
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In 1963, the over-the-counter market (the "OTC") was a collection of little-known and little-traded companies that the SEC characterized in a report to the U.S. Congress as "fragmented and obscure." Determined to bring relevance to this market, the SEC charged the NASD with creating an automated market. |
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On February 8, 1971, the Nasdaq came online, displaying median quotes for more than 2,500 securities. Executions were not done electronically at that time, they were still made over the telephone. |
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What a difference today! The Nasdaq National Market is made up of more than 4,400 companies, and the Nasdaq Small Cap Market is an additional 1,800 companies. Trading information is simultaneously transmitted to more than 500,000 computer terminals across the globe. About one billion shares are traded each day, creating the largest electronic marketplace in the world. |
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Nasdaq trading is done entirely on computers, with no exchange floor or trading specialists. Instead of floor brokers, orders are trans- |
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