NASDAQ, is an acronym for National Association of Securities Dealers Automated Quotations and also a stock exchange run by the National Association of Securities Dealers. This is also known as NASD, the regulatory body primarily responsible for the regulation of persons in the US securities industry.
When NASDAQ started trading in February 1971, it was the world's first electronic stock market. It is now is the largest American stock exchange with over half the companies trading in the United States listed. NASDAQ comprises the NASDAQ National Market and the NASDAQ SmallCap Market. The main exchange is in the United States with a branch in Japan and associations with exchanges in Hong Kong and Europe.
Instead of a huge stock-exchange building, NASDAQ relies on its computer system, which links an enormous network of dealers making markets in stocks listed on the system. Multiple market participants are allowed to trade through its electronic communications networks structure, thus increasing competition. In 1984, NASDAQ introduced the Small Order Execution System (SOES) ensuring the automatic processing of small market orders, which might otherwise be overlooked in 'turbulent' market conditions. In July 1995, the NASDAQ stock index closed above the 1000 mark for the first time.
In the largest civil settlement in US history, on 9 November 1998 a federal judge approved a US$103 billion settlement requiring dozens of brokerage houses (including Merrill Lynch, investment banking and stock brokerage company; Goldman Sachs, a NY investment bank and Salomon Smith Barney, now Citigroup Global Markets, to repay investors who claimed they had been cheated in a widespread price-fixing scheme on NASDAQ.
The NASDAQ index reached its peak of 5048.62 in March 2000. Then followed the dot.com boom collapse and the index fell by almost 80%! Five years later it is hovering around the 2000.00 mark.