What Makes NASDAQ Unique?

Who Trades NASDAQ Stocks?

Trading on NASDAQ is not limited to any fixed number of participants. This allows a large number of firms with widely different business models and trading technologies to connect to the NASDAQ network and compete on an equal basis. Rather than forcing investors to go through a single financial firm to buy or sell stocks, NASDAQ links up a variety of competitors and lets participants choose with whom they are going to trade. All firms trading NASDAQ stocks must be certified with the Securities and Exchange Commission (SEC) and registered with NASDAQ and NASD Regulation. Following are examples of the kinds of firms trading NASDAQ stocks:

Market Makers

Key to NASDAQ's market structure are a core group of financial firms called market makers. More than 500 market making firms trade on NASDAQ, acting as distributors for NASDAQ-listed securities. Also known as dealers, market makers are unique in that they commit their own capital to NASDAQ-listed securities then turn around and re-distribute the stock as needed. They are required at all times to post their bid and ask prices in the NASDAQ network where they can be viewed and accessed by all participants. By being willing to buy or sell stock using their own funds, market makers add liquidity to NASDAQ's market, ensure that there are always buyers and sellers for NASDAQ-listed securities, and enable trades to be filled quickly and efficiently.

ECNs

In addition to market makers, the NASDAQ network also connects alternative trading systems into the market, such as electronic communication networks (ECNs). ECNs provide electronic facilities that investors can use to trade directly with each other. As NASDAQ market participants, ECNs display either one-sided or two-sided quotes that reflect actual orders. Additionally, they provide investors with an anonymous way to enter orders into the marketplace. Unlike market makers, ECNs operate simply as order-matching mechanisms and do not maintain inventories of their own.

Order-Entry Firms

Order-entry firms are also NASDAQ market participants. Order-entry firms enter and execute orders through NASDAQ on behalf of retail and institutional customers and other broker/dealers, but they do not maintain buy or sell price quotations in NASDAQ-listed securities. Like ECNs, order-entry firms do not commit capital to stocks, but they do increase the competition among market participants helping to keep stock prices competitive and adding to the market's liquidity.

How Does NASDAQ's Market Structure Benefit Listed Companies?

Through its unique framework of multiple market participants, NASDAQ provides listed companies' securities with ready access to investors, visibility in the marketplace, and market conditions that promote immediate and continuous trading:

Liquidity

Liquidity is best defined as the ease with which stocks can be bought and sold in the market. By encouraging trading among a virtually unlimited number of market participants, NASDAQ offers an environment that facilitates greater liquidity.

Depth of Market

Depth of market refers to the total amount of money market makers have invested in a single security and is related to the number of market participants trading in the security. However, even a few market participants can provide abundant depth of market by committing to buy or sell large quantities of a security. Knowing there is depth of market can reassure investors of a stock's marketability, especially during periods of heavy trading volume.

Transparency
Transparency, the ability to view investors' buy and sell orders at different price levels, is crucial to the decision-making process in securities trading. NASDAQ's open market structure offers a level of transparency not found on other major U.S. markets. On NASDAQ, all bid and ask quotations in a given security are broadcast over the network. All NASDAQ market participants regardless of whether they are professional traders can see the same information.

Price Efficiency

In securities trading, as in most industries, competition is one of the most important factors in creating price efficiencies. The aggressive competition for orders fostered among NASDAQ's market participants helps to ensure that investors receive the best prices for the securities they trade.

nasdaq.com

nasdaq.com is one of the most popular financial sites on the Web. Averaging more than seven million page views per day, nasdaq.com offers unprecedented visibility to listed companies. Investors can log on to nasdaq.com and see how NASDAQ, Dow Jones, and the S&P 500 are performing, scan the latest news and fund commentary and get quotes for stocks, mutual funds, and options on major U.S. markets. With a wealth of investor services, users are encouraged to visit the following links for an overview of the site or to view the services available.

NASDAQ MarketSite^S

Located in the heart of New York's Times Square, NASDAQ's MarketSite Tower soars seven stories high and is the largest video screen in the world. CNBC, CNNfn, Bloomberg, CBS MarketWatch these and other financial news media broadcast live throughout the day from the MarketSite's Broadcast Studio, putting NASDAQ listed companies front and center before millions of investors.

Unparalleled Service

Companies can expect unparalleled service when they list on NASDAQ. Each NASDAQ company has a single point of contact: their NASDAQ Director, who serves as a link to an extensive portfolio of services. Directors provide day-to-day assistance and can offer valuable insight on investor relations, market and industry issues.

Executive Programs

NASDAQ-listed company executives are invited to participate in a variety of programs designed to present top managers with timely information and networking opportunities. NASDAQ programs include a wide range of topics such as industry sector specific seminars and investor relations forums that provide companies with the tools they need to be public.

NASDAQ Online^SM

Designed for senior executives at NASDAQ listed companies, NASDAQ Online is a  one-of-a-kind strategic planning tool. It provides market data on all US-traded companies and real-time quotes for NASDAQ stocks. Plus, there's key information on institutional ownership, research coverage, performance ratios and more. All data is continually updated and available in a single, integrated source. And NASDAQ Online is free to listed companies.

Global Vision

NASDAQ is building the world's first truly global stock market digital and Internet-accessible, open to anyone anywhere in the world, 24 hours a day. NASDAQ has already broken new ground in Europe, Hong Kong, and Canada , with additional plans for Asia, Latin America, and the Middle East. By reaching out around the globe, NASDAQ is creating new links to additional capital and an even broader pool of investors.

Related Links:
NASDAQ Canada

Start using our Professional Charts
and Make Money with our System!

Sign up for a 30-Day Free Trial Now!
(credit card not required)