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U.S. stock exchanges attract billions of dollars in capital every day. Investors from all around the world flock to buy and sell shares in some of the most exciting and profitable businesses in the country. One of the prime destinations for investors is the Nasdaq exchange, which is home to over 3,500 public listings and has a heavy focus on technology stocks.
"What we [at the NASDAQ] really do is, allow for buyers and sellers to come together in an efficient way and make sure that the trading is occurring in a fair and efficient manner. We basically are a global technology company at this point because we provide the stock exchange here in the States and so that's an electronic system that allows buyers and sellers to come together, we have the largest multi-listed options exchange in the United States, and we are an energy futures exchange here and we also own all of the exchanges other than Norway in the Nordic markets, and then we also provide the technology that powers 90 other markets around the world. So we, in fact, are truly global technology company at this point" - Adena T. Friedman
If you are curious about the Nasdaq exchange and what sets it apart from other stock exchanges, then this investfox guide is for you.
Since the Nasdaq is a world-renowned stock exchange, its reputation rests on the quality of the companies that trade their shares there. This is why the Nasdaq has four sets of requirements for IPO candidates. Each candidate must meet at least one of the four sets of requirements in order to obtain a spot on the list. Failure to meet these rules may result in the delisting of shares.
The four sets of requirements upheld by the Nasdaq are:
The Nasdaq is a for-profit exchange that generates its revenues through five different sources:
A company that wants to IPO on the Nasdaq must pay an entry fee based on the number of shares they wish to list and pay an annual fee to maintain the listing.
For the Nasdaq Global Market and Global Select Market, the fee structure can be summarized as follows:
For the Nasdaq Capital Market tier:
Companies listed on the Nasdaq are required to participate in the Nasdaq's all-inclusive fee program, which involves paying a single annual fee that covers all the typical costs associated with listing for the year. However, if a company needs a review of a delisting decision or wants to list new classes of securities, separate fees will still apply.
The program simplifies the fee structure by eliminating transactional fees for events such as issuing additional shares of an already listed class, record-keeping changes, substitution listing events, and requests for written interpretations of the Nasdaq's listing rules and requirements.
The Nasdaq-100 is one of the most followed equity indices in the world. The index is composed of 101 of the largest and most influential companies listed on the Nasdaq exchange. The index includes the likes of Apple, Meta, Amazon.com, Tesla, Alphabet, Microsoft, etc.
The Nasdaq-100 is a market capitalization-weighted index that includes the 101 largest stocks listed on the Nasdaq. The index is often used as a benchmark for the entire exchange, as 90% of the exchange’s movements can be attributed to the Nasdaq-100.
Here are a few notable facts to know about the Nasdaq-100:
The Nasdaq-100 was adversely affected by the 2022 bear market, which tanked technology stocks. The index is down over 10% over the past 12 months:
The Nasdaq-100 is a market capitalization-weighted index and the value of the index is equal to the sum total of the index share weights. Here’s how the weighting of the index is calculated:
Value of the index = Aggregate Adjusted Market Value / Divisor
Divisor = (Market value after adjustments / Market value before adjustments) X Divisor before adjustments.
There are three versions of calculating the index:
The Nasdaq Composite is the second most important index on the exchange, which tracks every stock listed on the Nasdaq to provide an aggregate market cap-weighted index that investors can follow. Nowadays, the Nasdaq Composite is one of the most popular indices on the market and is followed by millions of investors and analysts.
The Nasdaq Composite Index is a market capitalization-weighted index that consists of every stock listed on the Nasdaq exchange. The index was launched in 1971 and had an initial value of 100. The Nasdaq Composite is heavily weighted towards the technology sector, which accounts for over half of the index.
The bearish 2022 market has been hard on technology stocks, which is why the Nasdaq Composite is down by over 13% over the past 12 months:
The sector makeup of the Nasdaq Composite Index is as follows:
|Sector||Weight||Number of Securities|
As expected, the Nasdaq Composite is heavily weighted in favor of technology stocks, which represent over half of the total market cap of the exchange. However, it must also be noted that a bulk of that value comes from a handful of giant technology corporations, such as Apple, Meta, Amazon, Alphabet, Microsoft, etc.
For a more accurate perspective of the index, let’s look at the weight breakdown by 10 of the largest listings on the Nasdaq:
|GOOG||Alphabet Class C||3.18%|
|GOOGL||Alphabet Class A||3.11%|
|META||Meta Platforms Inc||1.60%|
As evident from the chart, the Nasdaq Composite is heavily outweighed by its largest components. Namely, the 10 largest stocks on the index by market capitalization account for nearly 43% of the entire index.
The Nasdaq is home to the stocks of some of the largest companies in the world, including Apple, Meta, Amazon, Tesla, Alphabet, Microsoft, etc. The Nasdaq exchange is home to a large number of technology stocks, which represent roughly half of the market capitalization of the exchange.
Yes. Nasdaq Inc, the owner, and operator of the Nasdaq exchange is also a public company and is listed under the NDAQ ticker symbol. Nasdaq Inc also owns and operates the Nasdaq Baltic exchanges in Estonia, Latvia, and Lithuania.
Apple is by far the largest company currently listed on the Nasdaq and accounts for over 12% of the market capitalization of the entire exchange.