NASDAQ is an acronym of National Association of Securities Dealers Automated Quotations and it is an American Stock Exchange. With approximately 3,200 companies being traded on its exchange it is the United States' largest electronic screen-based equity securities trading market.
NASDAQ has been around since 1971 and is located in New York City. The National Association of Securities Dealers (NASD) are the original founders of NASDAQ, but now the exchange is owned and operated by the NASDAQ OMX Group. Since this is a public company and the stock of the NASDAQ OMX Group is listed on its own exchange, it is monitored by the Securities and Exchange Commission (SEC).
The history of NASDAQ being the largest electronic screen-based equity securities dates back to its' 1971 roots. When the exchange first started trading it was done by a computer bulletin board system. At that point buyers and sellers weren't actually connected. Over the years, NASDAQ added automated trading systems. Until the crash of 1987 most trading was done as a phone transaction. But when the traders didn't answer their phone, NASDAQ got another electronic boost and electronic method for dealers was created in the guise of the Small Order Execution System (SOES).
Like all stock exchanges, the volume and value of NASDAQ trades are influenced by an index. The NASDAQ Composite has been in effect since the exchange went into affect. In 1985 NASDAQ 100 index (along with the NASDAQ 100 Financial Index) was introduced to track traded large cap funds.
Although they are both stock exchanges there are several major differences between the NASDAQ and the New York Stock Exchange:
NASDAQ
Has mostly tech companies
Over the counter market
Market makers
Not physical entity
NEW YORK STOCK EXCHANGE
Has many household names
Auction market
Floor traders
Housed on wall street
