The premier electronic stock exchange, Nasdaq, founded in 1971, is the first electronic stock market known for its technological innovation. It has reshaped securities trading and global finance from its headquarters in New York City. Operated by Nasdaq, Inc., the company trades under the ticker NDAQ and has expanded through acquisitions in the past decade.
Before Nasdaq, stock trading was manual and inefficient. Nasdaq revolutionized trading with a computerized system, lowering transaction costs and improving execution speed and accuracy. All trades are executed electronically, without a physical trading floor.
Nasdaq’s technology supports high-frequency trading and real-time data dissemination, promoting global accessibility for investors. The exchange uses blockchain and AI to enhance efficiency, security, and transparency. Nasdaq also provides market technology solutions to exchanges and financial institutions worldwide.
Nasdaq lists over 4,000 companies with a combined market cap of over $20 trillion, including tech giants like Apple, Microsoft, Amazon, and Tesla. Beyond equities, it trades ETFs, derivatives, and other financial instruments.
The exchange has three tiers: NASDAQ Global Select Market (large companies), NASDAQ Global Market (mid-cap firms), and NASDAQ Capital Market (small, emerging companies). Listing requirements vary by tier based on metrics like market cap, revenue, and corporate governance.
Strategic Moves to Enhance Market Presence
Nasdaq has made 22 acquisitions over the last twenty years and at least 5 in the last five. Through this series of transactions, the company expanded its operations, solidifying its position as a global leader in financial markets and technology solutions. These acquisitions have allowed Nasdaq to enhance its technological capabilities, diversify its product offerings, and broaden its geographic reach.
A seminal event in 2008 was the $3.7 billion acquisition of OMX Group which expanded Nasdaq’ securities exchange business into unrepresented geographies in Europe and the Nordic region. At the time, this made Nasdaq the largest securities trading company in the world, supporting 70 exchanges in 50 countries. The size and complexity of the OMX Group’s acquisition during the financial crisis set the stage for other meaningful transactions. Among those, Verafin in 2021 for $2.75 billion, Adenza in 2023 for $10.5 billion and Instinet in 2005 for $1.9 billion stand out for their size. Verafin enhanced Nasdaq’s in-house regulatory technology stack with advanced anti-money laundering (AML) and fraud detection software. Verafin was important to Nasdaq to apply standardization, where it could, to overseas institutions. Adenza was acquired from the private equity firm Thoma Bravo and turbo charged Nasdaq’s risk management systems. Instinet strengthened its all-electronic trading platform, where institutional money managers (and traders) could execute trades from their desktop. In theory, those trade requests (for example, buying a stock) would be automatically matched with different institutions taking the other side (i.e. selling the same stock) and at reduced commission rates.
Another acquisition of note was Upland, bought in 2023 for an undisclosed amount. Upland is a cloud-based platform for enterprise collaboration and project management. Upland expands Nasdaq’s software-as-a-service (SaaS) to industries in the finance, healthcare, and technology sectors enabling them to streamline operations and improve productivity. Nasdaq is clearly surrounding current and potential customers with more and more touch points, not just trading execution.
We admire Nasdaq’s size, scale and breadth of operations.
