Financial Dictionary
Atlantic Financial
Atlantic Financial
Investment
Word
The NASDAQ is an
over the counter market on which many large
companies trade their
stocks.
For example Microsoft (stock symbol MSFT) and Intel (stock symbol INTC) trade
on the NASDAQ exchange. The NASDAQ has been known in recent years as the home of
many companies that have had outstanding performance.
NASDAQ, NASDAQ exchange, OTC (Over the Counter)
The Nasdaq exchange is a leading U.S. electronic stock market, specializing in
over-the-counter (OTC) securities. The Nasdaq electronically provides real-time
quotes for OTC securities, as well as many companies listed on the New York
Stock Exchange (NYSE).
The Nasdaq opened in 1971 and has consistently led innovations in the use of
information technology in the world of investing. Trades on Nasdaq are executed
through a sophisticated computer and telecommunications network designed to
transmit timely and critical information to investors.
The Nasdaq includes two separate markets: 1) the Nasdaq National Market, that
trades the largest and most active securities; and (2) The Nasdaq SmallCap
Market that lists a smaller number of emerging growth companies. The Nasdaq is
home to companies from a number of industries, including retail, communications,
financial services, transportation, media and biotechnology.
A wide array of OTC securities that are not listed on major exchanges are
available through the Nasdaq. According to the American Association of
Individual Investors, OTC securities include stocks of small and emerging
companies, large technology companies such as Microsoft, a majority of corporate
bonds and preferred stocks, as well as most U.S. Treasury and municipal bonds.
Many new stock issues are initially made available as OTC securities. In
addition, the OTC market is often used by individual investors who wish to offer
large blocks of outstanding shares offered for sale, regardless of whether these
shares are listed on an exchange. OTC “market makers” are composed of dealers
who negotiate transactions by telephone and computer. These dealers purchase
stocks for their own account and sell them to customers at a markup.
Since its inception, Nasdaq has focused its efforts on investing in technology
innovations to provide more efficient markets for both investors and issuers.
Over the years, it has invested heavily in new technology to facilitate more
efficient pricing, faster trade executions and reduce transaction costs for
investors. The dot-com boom in the 1990s brought to the forefront the importance
of electronic exchanges, and the Nasdaq made its mark as the exchange of choice
for emerging high-tech companies.
As of 2005, the Nasdaq exchange lists more than 3,200 companies, and trades more
shares per day on average than even the NYSE. In 2004, the average daily volume
in Nasdaq-listed securities totaled 1.8 billion shares, higher than volumes
recorded by the NYSE and the Amex. Compared with 2003 figures, the 2004 average
daily dollar volume for the Nasdaq increased 24% to $34.6 billion, while the
total dollar volume traded was $8.8 trillion, also representing a 24% increase.
The Nasdaq exchange operates under the supervision of the National Association
of Securities Dealers, Inc. (NASD), a voluntary association of securities firms
empowered by the Maloney Act of 1938 to regulate securities firms. The NASD also
retains records on investment professionals and firms and allows members of the
public to request information as to whether their investment professional has
had any disciplinary action. We encourage customers and potential customers to
review the records of any financial professional from Atlantic Financial.
If you’re interested in finding out more information about investment
opportunities in OTC securities via Nasdaq or through mutual funds that invest
in Nasdaq stocks, Atlantic Financial’s investment advisers can help explore
various options. We invite you to contact one of our financial experts to
discuss your investment objectives.
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