The New York Stock Exchange has been around for a long time – it was officially formed in 1792, and is home to many of the world’s biggest and most successful companies. For a long time, it was the Big Daddy of American – indeed, world – stock exchanges. But at the beginning of the 1970s, it found itself with an upstart competitor.
America’s National Association of Securities Dealers was a body set up to regulate the OTC market (‘over the counter’ securities which were not traded on traditional stock exchanges).
To enable investors to trade more efficiently, it set up its own speedy and transparent trading system – the National Association of Securities Dealers Automated Quotations, or Nasdaq. It began trading on this day in 1971, providing trading for over 2,500 securities. It was a very different beast to the venerable old stock exchanges of yore. It didn’t have a big building full of men in silly coats shouting at each other. This was the future – this was an electronic exchange.
It expanded rapidly, and soon gained a reputation where tech stocks would list. And while it is very tech heavy, it counts car hire firms, airlines, banks and food companies among its listings.
It trades around two billion shares a day – more than any other exchange. Since the millennium it has overseen over a thousand stockmarket flotations. It is the second-largest exchange in the world by market capitalisation. With companies including Apple and Google – each with a market cap of some $500bn – and Microsoft, with a market cap of over $400bn, that’s hardly surprising.
Its flagship index, the Nasdaq Composite, began life at 100 in 1971, shot up to over 5,000 before the spectacular dotcom crash of 2000, when it lost some 78% of its value. It peaked again in the summer of 2015. It is currently some 15% below its peak.