Nasdaq

Nasdaq is an American electronic stock exchange operated by Nasdaq Inc. (formerly NASD, the National Association of Securities Dealers Automated Quotations), launched on 8 February 1971 as the world’s first electronic stock market. Nasdaq is the second-largest stock exchange globally by total market capitalisation, after the New York Stock Exchange (NYSE) , with a combined listed-company market capitalisation of approximately USD 27 trillion as of 2026. Nasdaq is the principal listing venue for many of the world’s largest technology and growth companies, including Alphabet (Google), Microsoft, Amazon, Meta Platforms, Tesla, and Nvidia, alongside thousands of other US and international listings.

The Nasdaq Stock Market operates as the listing venue; the Nasdaq Composite Index tracks all common stocks listed on the exchange (approximately 3,000+ companies), and the Nasdaq 100 Index tracks the 100 largest non-financial companies on the exchange. Both indices are widely used as benchmarks for US-technology and US-growth investing globally. Indian mutual funds with overseas-equity allocations frequently hold Nasdaq-listed companies; the Parag Parikh Flexi Cap Fund (PPFCF) , which allocates up to 35 per cent of corpus to overseas equity, has historically held substantial Nasdaq-listed positions including Alphabet, Microsoft, Amazon, and Meta Platforms.

Origin and 1971 launch

Pre-Nasdaq US OTC market

Before 1971, US over-the-counter (OTC) stock trading was decentralised and inefficient. OTC stocks (those not listed on major exchanges like NYSE or AMEX) were traded through informal broker-dealer networks, with prices quoted on pink sheets (paper-based daily quotation sheets) and updated slowly. The system suffered from:

• Price opacity: Investors could not easily access real-time pricing.
• Inefficient execution: Trade execution required manual phone-based negotiation between dealers.
• Wide spreads: The bid-ask spreads on OTC stocks were typically wider than exchange-listed stocks.
• Fragmentation: Different dealers might quote different prices simultaneously.

The 1969 Wheat Report (a SEC-commissioned study) recommended automating OTC trading. The National Association of Securities Dealers (NASD), the self-regulatory organisation for US broker-dealers, was tasked with implementing this.

8 February 1971 launch

Nasdaq launched as the NASDAQ Stock Market on 8 February 1971. The system was the world’s first electronic stock market, replacing the pink-sheets paper-based quotation with computerised real-time price display. Initially, Nasdaq provided automated quotation only; actual trade execution still required broker-dealer phone negotiation. The system progressively added execution capabilities through the 1970s and 1980s.

The launch represented a fundamental shift in market microstructure: from manual to automated, from opaque to transparent, from fragmented to centralised quotation. Nasdaq’s electronic model influenced subsequent exchange developments globally.

Spin-off from NASD

In 2000-2001, Nasdaq was spun off from NASD as a publicly-traded entity, eventually listing on itself as Nasdaq Inc. (current ticker: NDAQ). NASD became FINRA (Financial Industry Regulatory Authority) in 2007, retaining the regulatory function while exchange operations remained with Nasdaq Inc.

Modern operational scale

By 2026, Nasdaq:

• Lists approximately 3,000+ companies.
• Has a combined market capitalisation of approximately USD 27 trillion.
• Trades approximately 6 billion shares daily on average.
• Operates additional exchanges and market venues beyond the original Nasdaq Stock Market.

Listing structure

Nasdaq market tiers

The Nasdaq Stock Market operates three listing tiers, distinguished by listing standards:

Nasdaq Global Select Market

The highest tier, with the strictest listing standards. Companies must meet substantial financial, governance, and operational thresholds. Most large-cap Nasdaq-listed companies (Alphabet, Microsoft, Amazon, Meta, Tesla, Nvidia) are on this tier.

Listing standards include:

• Minimum bid price.
• Minimum public float and market capitalisation.
• Minimum number of publicly-held shareholders.
• Audited financial reports.
• Corporate governance standards (independent directors, audit committee, etc.).

Nasdaq Global Market

The middle tier, with less stringent standards than Global Select but more rigorous than Capital Market.

Nasdaq Capital Market

The lowest tier, suited to smaller and emerging companies. Lower minimum thresholds for market cap, public float, and operating history.

Listing process

Companies seeking to list on Nasdaq follow:

• IPO route: Initial Public Offering with SEC registration and Nasdaq listing application.
• Direct listing: Listing without raising capital (used by Slack, Spotify, etc.).
• Reverse merger: Acquisition of a Nasdaq-listed company.

Nasdaq’s listing process is competitive with NYSE; companies often choose between the two based on listing standards, prestige, and operational fit.

International listings

Nasdaq lists both US and international companies. Indian companies on Nasdaq are rare but include:

• Infosys Technologies (listed under ADR programme until delisted in 2018).
• Wipro (delisted ADR programme).
• Various smaller Indian companies through ADRs.

Most large Indian companies listed on US exchanges are now on NYSE rather than Nasdaq.

Major Nasdaq indices

Nasdaq Composite Index

The Nasdaq Composite Index (ticker: COMP) tracks all common stocks listed on the Nasdaq Stock Market, weighted by market capitalisation. Key features:

• Coverage: All approximately 3,000 Nasdaq-listed common stocks.
• Calculation: Market-cap-weighted with dilution adjustments.
• History: Base value of 100 set on 5 February 1971 (launch day).
• Notable peaks and crashes: Crossed 5,000 in March 2000 at the dot-com peak; crashed to approximately 1,100 in October 2002 in the dot-com bust; recovered and crossed 10,000 by mid-2020; crossed 15,000 in 2021.
• Composition: Approximately 50 per cent technology, 20 per cent consumer services, 10 per cent healthcare, with the balance in financials, industrials, and other sectors.

The Nasdaq Composite is one of the most-watched US equity indices alongside the S&P 500 and Dow Jones Industrial Average.

Nasdaq 100 Index

The Nasdaq 100 Index (ticker: NDX) tracks the 100 largest non-financial companies listed on Nasdaq, market-cap-weighted with concentration-limit adjustments. Key features:

• Coverage: Top 100 non-financial Nasdaq companies.
• Calculation: Modified market-cap-weighted with periodic rebalancing.
• Sectoral concentration: Heavily technology (approximately 50-60 per cent), with significant consumer (Amazon, Tesla), communications (Alphabet, Meta), and healthcare (biotech) exposure.
• Top holdings (representative): Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Nvidia, Tesla, Costco, PepsiCo, ASML.
• History: Launched 31 January 1985.
• Underlying ETFs: The Nasdaq 100 is the underlying index for major ETFs including Invesco QQQ (QQQ), one of the most-traded US ETFs.

The Nasdaq 100 is the principal proxy for US-large-cap-technology investing.

Other Nasdaq indices

Nasdaq publishes numerous additional indices:

• Nasdaq Biotechnology Index (NBI): Biotech-focused.
• Nasdaq Financial 100: Financial-sector Nasdaq listings.
• Nasdaq Bank Index: Banking-sector listings.
• Nasdaq Insurance Index: Insurance-sector listings.
• Various sector and thematic indices.

Nasdaq Inc. as an exchange operator

Beyond Nasdaq Stock Market

Nasdaq Inc., as a publicly-traded company, operates multiple exchanges and market venues:

• Nasdaq Stock Market (the principal listing venue).
• Nasdaq PHLX (Philadelphia Stock Exchange, acquired 2007): Options trading.
• Nasdaq BX: Multiple sub-exchanges.
• Nasdaq Nordic: European exchanges in Stockholm, Helsinki, Copenhagen, Iceland.
• Nasdaq Baltic: Tallinn, Riga, Vilnius.
• Nasdaq Dubai: GCC region listings.

Technology and data services

Nasdaq Inc.’s revenue beyond exchange operations:

• Market data: Selling real-time and historical market data.
• Market technology: Selling trading technology to other exchanges globally.
• Corporate services: Listing-related services, IR services.
• Anti-financial-crime technology: Surveillance and compliance technology.

These services represent a substantial portion of Nasdaq Inc.’s revenue, reflecting the company’s evolution from a pure exchange operator to a financial-services technology firm.

Major Nasdaq-listed companies relevant to Indian mutual funds

Top global technology holdings

Nasdaq hosts the largest US technology companies, many of which appear in Indian mutual fund overseas-allocation portfolios:

• Apple Inc.: World’s largest company by market cap (over USD 3.5 trillion as of 2026). Major consumer technology and services company. Indian mutual fund holdings include various funds; PPFCF has held Apple intermittently.

• Microsoft Corporation : Approximately USD 3 trillion market cap. Software, cloud (Azure), gaming, productivity. A core holding in PPFCF.

• Alphabet Inc. (Google) : Approximately USD 2 trillion+ market cap. Search, advertising, cloud, Other Bets. A long-standing PPFCF holding.

• Amazon.com Inc. : Approximately USD 2 trillion market cap. E-commerce, AWS cloud, advertising, streaming. A PPFCF holding.

• Meta Platforms Inc. : Approximately USD 1.5 trillion market cap. Facebook, Instagram, WhatsApp, Reality Labs. A PPFCF holding.

• Nvidia Corporation: AI/semiconductor leader; rose to approximately USD 3 trillion market cap by 2026 amid AI demand.

• Tesla Inc.: Electric vehicles and energy storage.

• Broadcom: Semiconductor and software.

These companies’ concentration on Nasdaq makes the exchange the principal venue for US-tech exposure.

Indian mutual fund overseas-allocation context

Parag Parikh Flexi Cap Fund holds approximately 11-16 per cent of corpus in overseas equity as of 2026 (down from a 2021 peak of approximately 28 per cent due to the SEBI overseas-cap suspension in 2022). The overseas holdings are concentrated in Nasdaq-listed companies:

• Microsoft (PPFCF holding since approximately 2017).
• Alphabet (PPFCF holding since approximately 2015).
• Amazon (PPFCF holding).
• Meta Platforms (PPFCF holding).
• Berkshire Hathaway (Class B, NYSE-listed, but featured in PPFCF’s overseas allocation alongside Nasdaq holdings).

These companies represent the principal Indian mutual fund interface with Nasdaq.

Nasdaq Composite versus other US indices

The Nasdaq Composite and Nasdaq 100 are technology-heavy; the S&P 500 is the broader US-large-cap benchmark.

Regulatory framework

US Securities and Exchange Commission

Nasdaq operates as a Self-Regulatory Organisation (SRO) under the oversight of the US Securities and Exchange Commission (SEC). The SEC:

• Approves listing standards and changes.
• Reviews market-rule changes.
• Investigates trading abuses.
• Regulates the broker-dealer activities of Nasdaq-listed companies’ market makers.

FINRA

The Financial Industry Regulatory Authority (FINRA) (the SRO that emerged from NASD in 2007) regulates broker-dealer activities. Nasdaq market makers and broker-dealer participants are subject to FINRA rules.

Listing-standard enforcement

Nasdaq has authority to:

• Halt trading for material news pending.
• Delist companies failing listing standards.
• Take disciplinary action against listing violations.

The delisting process is significant; companies failing standards (e.g., minimum bid price for an extended period) may be moved to OTC markets, with substantial valuation consequences.

Trading mechanics

Electronic trading

Nasdaq’s electronic trading framework:

• Order types: Market, limit, stop, stop-limit, and various advanced order types.
• Quote types: Bid (buy), ask (sell), with size and price.
• Trading hours: 9:30 AM to 4:00 PM ET (regular hours); pre-market 4:00 AM to 9:30 AM ET; after-hours 4:00 PM to 8:00 PM ET.
• Market makers: Approved firms that maintain two-sided quotes; provide liquidity.

Order routing

Nasdaq orders can be routed through multiple paths:

• Direct to Nasdaq for execution.
• Through other Nasdaq Inc.-operated venues.
• Through alternative exchanges (NYSE, regional exchanges).
• Through dark pools and other off-exchange venues.

The US National Best Bid and Offer (NBBO) framework ensures the best price across venues.

Settlement

Nasdaq trades settle on T+1 (one business day) following the 2024 reduction from T+2.

Notable historical episodes

1971 launch and 1970s adoption

The 1971 launch was modest in initial scope; broad adoption took through the 1970s.

1980s tech-listing era

Many emerging tech companies listed on Nasdaq through the 1980s, establishing the exchange’s technology-centric reputation: Apple (1980), Microsoft (1986), Cisco Systems (1990), Intel (1971).

1990s dot-com boom

The 1990s saw substantial Nasdaq listings of internet-era companies. The Nasdaq Composite rose from approximately 500 in 1990 to over 5,000 in March 2000.

2000-2002 dot-com bust

The Nasdaq Composite fell approximately 78 per cent from peak to trough (March 2000 to October 2002). Many dot-com era companies were delisted.

2008 global financial crisis

Nasdaq Composite declined approximately 50 per cent in the financial crisis (October 2007 to March 2009 trough).

2009-2021 recovery and growth

Nasdaq Composite rose approximately 12-fold from its March 2009 trough to its November 2021 peak (approximately 16,000), driven by technology-sector growth and large-cap technology companies’ (FAANG) outperformance.

2022 tech correction

Nasdaq Composite declined approximately 35 per cent in 2022 as inflation and Federal Reserve tightening pressured technology valuations.

2023-2026 AI-driven rally

The emergence of generative AI from late 2022 (ChatGPT launch) drove substantial Nasdaq Composite gains, particularly for Nvidia, Microsoft, and Alphabet. The index reached new all-time highs.

See also

• New York Stock Exchange
• Microsoft at PPFCF
• Alphabet at PPFCF
• Amazon at PPFCF
• Meta Platforms at PPFCF
• Berkshire Hathaway at PPFCF
• Parag Parikh Flexi Cap Fund
• PPFAS Mutual Fund
• International diversification PPFAS
• SEBI MF overseas investment cap
• Mutual fund industry India
• How to read PPFCF portfolio-holdings disclosure

External references

• Nasdaq Inc. official site
• Nasdaq Stock Market listings
• Nasdaq Composite Index information
• Nasdaq 100 Index information
• US Securities and Exchange Commission
• FINRA

References

1. Nasdaq Inc. official site at nasdaq.com.
2. Nasdaq Inc. Annual Reports and SEC filings.
3. Nasdaq listing standards documentation (Listing Rules 5xxx series).
4. SEC Form 10-K filings of Nasdaq-listed major companies.
5. Wheat Report on Disclosure to Investors (1969).
6. Nasdaq Composite Index methodology documentation.
7. Nasdaq 100 Index methodology documentation.
8. Invesco QQQ Trust (QQQ) ETF prospectus.
9. PPFAS Mutual Fund monthly factsheets covering Nasdaq-listed holdings.
10. Press archive of Nasdaq history (Wall Street Journal, Financial Times, Bloomberg).
11. FINRA (formerly NASD) regulatory documentation.
12. SEC framework for Self-Regulatory Organisations.
13. CFA Institute Investment Foundations on US capital markets.
14. SEBI Circular on Indian mutual fund overseas-equity allocation (2021-2022).
15. AMFI industry data on Indian MF overseas-allocation positions.