What Effects Does NASDAQ Have on the Stock Market?

by Vicki A. Benge

NASDAQ OMX Group, which claims to be the world's largest exchange company, and 70 exchanges spanning 50 countries use NASDAQ technologies to operate markets. Including the NASDAQ exchange in the U.S., the company owns and operates 24 markets across the globe, most of which trade equities. However, six of them trade commodities, fixed-income products, futures, options and other derivatives.

Accessibility

A major effect on global markets from the presence of NASDAQ technology is accessibility. Credited with creating electronic trading, NASDAQ's electronic platform became accessible to investors from their home. In addition, the trading technology initiated by NASDAQ is now commonplace around the world.

Listing Options

A major effect that NASDAQ has on U.S. markets is providing options for companies that seek to list on a national exchange. Although a few companies, such as Charles Schwab and Walgreens, list on two exchanges, generally a public company in the United States chooses between NASDAQ and the New York Stock Exchange (NYSE) prior to the initial public offering (IPO). However, should a company choose to list on NASDAQ and NYSE, this option is readily available if the firm meets listing standards for both exchanges.

Technology Sector

Comprising the largest firms based on market capitalization, with securities listed on the NASDAQ Stock Market, the NASDAQ-100 Index contains several of the world's mostly actively traded stocks. Home to an impressive group of securities, the index excludes those of financial companies. For example, among the NASDAQ-100 companies are some of the largest and most prominent technology firms in the world. Heavy trading volume in Apple securities alone can noticeably affect the U.S. stock market in a single trading session, notwithstanding the impact the group has a whole on the nation's technology sector.

Investor Information

NASDAQ OMX Group's effect on the U.S. stock market is easily discerned from the U.S. Justice Department ruling in May 2011, which prohibited the acquisition of NYSE Euronext, the parent company of the New York Stock Exchange, by NASDAQ and Intercontinental Exchange Inc. of Atlanta. The Justice Department announced plans to file an antitrust suit against the companies if they pursued the acquisition. The announcement stated that should the merger go through a competitive offering for corporate stock listing services would have been "substantially" eliminated. The Justice Department summary clearly identified NASDAQ and the NYSE as the two most important players in U.S. trading in providing information and services to traders.

Photo Credits

  • business charts with buy image by Andrew Brown from Fotolia.com