While the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) represent the history of stock markets in the United States, the NASDAQ, which stands for "National Association of Securities Dealers Automated Quotations," represents the future, or, perhaps, the present, depending on one's point of view.

Unlike the NYSE or AMEX, which trace their histories back to the 19th centuries and before when stocks were traded on a New York street corner, NASDAQ does not have, and never has had, a real trading floor. It is a "virtual" stock market, meaning all trades are done electronically. While its main exchange is in the United States, it also has exchange branches in Canada and Japan and associations with exchanges in Hong Kong and Europe, making it a global stock market.

Dawn of the Information Age

Saying that NASDAQ is an electronic, computer-driven stock market seems perfectly normal these days, but, when it was founded in 1971, it was an incredibly advanced concept. Run by the National Association of Securities Dealers (NASD), it was founded in a day when there was no internet and computers were huge machines that filled entire floors of office buildings but had less computing power than a state-of-the-art laptop does these days.

It also is a market of rapid advances. Even the name is in flux. Traditionally (if one can speak of "tradition" for a market less than 50 years old) the name always has been written in capital letters as an acronym, but the more accepted version now is to refer to "Nasdaq" (without capital letters) as a proper noun. Anyone doing research into the market will find multiple references to both versions.

While NASDAQ is not the only electronic stock market (it has at least two other main rivals) it is by far the largest. In fact, in 1999, it passed the NYSE in volume to become the largest stock market in the world.

OTC

NASDAQ operates by buying and selling what are called over-the-counter (OTC) stocks. Those are stocks bought and sold outside of the organized stock markets. Over-the-counter trading is the single largest securities market in the United States today, including almost all government securities and municipal and corporate bonds.

NASDAQ provides price quotations on approximately 5,000 of the more actively traded OTC stocks. The exchange includes all types of companies, but is traditionally home to many high-tech stocks. The big ones include Microsoft, Intel, Dell, and Cisco.