Nasdaq

Nasdaq is a US stock exchange operated by Nasdaq, Inc. It began trading in 1971 as the first electronic stock market and today lists thousands of companies, with a heavy concentration in technology, biotech and other growth sectors.

How it works

Nasdaq has no trading floor. Orders meet in an electronic limit order book, and liquidity comes from competing market makers and other participants posting bids and offers. The exchange runs opening and closing crosses (auctions) that set the official open and close prices.

Listed companies sit in one of three tiers, each with different financial and liquidity standards:

Continued listing rules include a minimum bid price of $1.00, minimum stockholders' equity or market value thresholds, and corporate governance requirements such as an independent audit committee.

Nasdaq also publishes widely followed indexes, including the Nasdaq Composite and the Nasdaq-100.

Why it matters for traders

Nasdaq compliance notices are frequent catalysts for small caps. A company that falls below a listing standard must disclose the deficiency on an 8-K, and repeated failures can lead to delisting to the OTC markets. Moves between tiers or a switch to the NYSE also show up as filings and press releases.

Nasdaq halt codes (such as T1 for news pending) are the standard reference traders use when a stock stops trading intraday.

FAQ

Is Nasdaq the same as the Nasdaq Composite?

No. Nasdaq is the exchange. The Nasdaq Composite is an index of the common stocks listed on it, and the Nasdaq-100 tracks the 100 largest non-financial companies listed there.

What does it mean when a stock moves to the Nasdaq Capital Market?

Usually the company no longer meets a higher tier's standards. Transferring can also give a company extra time to cure a bid price deficiency.