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What is Nasdaq?

Nasdaq is an electronic trading market for buying and selling securities that began operations in 1971. This was almost 200 years after the New York Stock Exchange was established in 1792. It was originally created by the National Association of Securities Dealers (NASD), but dissolved that relationship in 2006 and merged with Scandinavian exchange OMX in 2007 to become the world’s largest electronic exchange.

Unlike the New York Stock Exchange, the Nasdaq does not have a trading floor and trades are made through investment firms otherwise known as market makers, who maintain inventories of securities. Market makers buy and sell from their own inventories to fulfill investor trades. There are more than 500 broker-dealer firms in the U.S. that are Nasdaq market makers.

The Nasdaq Composite is the index of approximately 3,200 stocks that trade on the Nasdaq exchange. While over 50% of the companies in the index are technology companies, all industries are represented in the Nasdaq.

Jemma Everyday Wisdom: Many investors look to the performance of the Nasdaq index to gauge the performance of technology and high-growth companies.

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