The Nasdaq Stock Market is an American stock exchange based in New York City. It is the most active stock trading venue in the U.S. by volume, and ranked second on the list of stock exchanges by market capitalization of shares traded, behind the New York Stock Exchange. The exchange platform is owned by Nasdaq, Inc., which also owns the Nasdaq Nordic stock market network and several U.S.-based stock and options exchanges. Although it trades stock of healthcare, financial, entertainment, retail, and food businesses, it focuses more on technology stocks. The exchange is made up of both American and foreign firms, with China and Israel being the largest foreign sources.
A stock market crash is a sudden dramatic decline of stock prices across a major cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic selling and underlying economic factors. They often follow speculation and economic bubbles.
NYSE Chicago, formerly known as the Chicago Stock Exchange (CHX), is a stock exchange in Chicago, Illinois, US. The exchange is a national securities exchange and self-regulatory organization, which operates under the oversight of the U.S. Securities and Exchange Commission (SEC). Intercontinental Exchange (ICE) acquired CHX in July 2018 and the exchange rebranded as NYSE Chicago in February 2019.
The National Stock Exchange (NSX) is an electronic stock exchange based in Jersey City, New Jersey. It was founded March 1885 in Cincinnati, Ohio, as the Cincinnati Stock Exchange.
An exchange-traded fund (ETF) is a type of investment fund that is also an exchange-traded product, i.e., it is traded on stock exchanges. ETFs own financial assets such as stocks, bonds, currencies, debts, futures contracts, and/or commodities such as gold bars. Many ETFs provide some level of diversification compared to owning an individual stock.
The Securities Exchange Act of 1934 is a law governing the secondary trading of securities in the United States of America. A landmark piece of wide-ranging legislation, the Act of '34 and related statutes form the basis of regulation of the financial markets and their participants in the United States. The 1934 Act also established the Securities and Exchange Commission (SEC), the agency primarily responsible for enforcement of United States federal securities law.
An electronic communication network (ECN) is a type of computerized forum or network that facilitates the trading of financial products outside traditional stock exchanges. An ECN is generally an electronic system accessed by an electronic trading platform that widely disseminates orders entered by market makers to third parties and permits the orders to be executed against them in whole or in part. The primary products that are traded on ECNs are stocks and currencies. ECNs are generally passive computer-driven networks that internally match limit orders and charge a very small per share transaction fee.
The OTC (Over-The-Counter) Bulletin Board or OTCBB was a United States quotation medium operated by the Financial Industry Regulatory Authority (FINRA) for its subscribing members. FINRA closed the OTCBB on November 8, 2021.
OTC Markets Group, Inc. is an American financial services corporation that operates a financial market providing price and liquidity information for almost 12,400 over-the-counter (OTC) securities. The group has its headquarters in New York City. OTC-traded securities are organized into three markets to inform investors of opportunities and risks: OTCQX, OTCQB and Pink.
A trading curb is a financial regulatory instrument that is in place to prevent stock market crashes from occurring, and is implemented by the relevant stock exchange organization. Since their inception, circuit breakers have been modified to prevent both speculative gains and dramatic losses within a small time frame. When triggered, circuit breakers either stop trading for a small amount of time or close trading early in order to allow accurate information to flow among market makers and for institutional traders to assess their positions and make rational decisions.
Naked short selling, or naked shorting, is the practice of short-selling a tradable asset of any kind without first borrowing the asset from someone else or ensuring that it can be borrowed. When the seller does not obtain the asset and deliver it to the buyer within the required time frame, the result is known as a "failure to deliver" (FTD). The transaction generally remains open until the asset is acquired and delivered by the seller, or the seller's broker settles the trade on their behalf.
Extended-hours trading is stock trading that happens either before or after the trading day regular trading hours (RTH) of a stock exchange, i.e., pre-market trading or after-hours trading.
The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD) as well as to the member regulation, enforcement, and arbitration operations of the New York Stock Exchange. The U.S. government agency that acts as the ultimate regulator of the U.S. securities industry, including FINRA, is the U.S. Securities and Exchange Commission (SEC).
The Consolidated Tape Association (CTA) oversees the Securities Information Processor that disseminates real-time trade and quote information in New York Stock Exchange (NYSE) and American Stock Exchange (AMEX) listed securities. It is currently chaired by Emily Kasparov of the Chicago Stock Exchange, the first woman and the youngest chair elected to the position.
The National Market System (NMS) is a regulatory mechanism that governs the operations of securities trading in the United States. Its primary focus is ensuring transparency and full disclosure regarding stock price quotations and trade executions. It was initiated in 1975, when, in the Securities Acts Amendments of 1975, Congress directed the Securities and Exchange Commission (SEC) to use its authority to facilitate the establishment of a national market system. The system has been updated periodically, for example with the Regulation NMS in 2005 which took into account technological innovations and other market changes.
High-frequency trading (HFT) is a type of algorithmic trading in finance characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages high-frequency financial data and electronic trading tools. While there is no single definition of HFT, among its key attributes are highly sophisticated algorithms, co-location, and very short-term investment horizons in trading securities. HFT uses proprietary trading strategies carried out by computers to move in and out of positions in seconds or fractions of a second.
The May 6, 2010, flash crash, also known as the crash of 2:45 or simply the flash crash, was a United States trillion-dollar flash crash which started at 2:32 p.m. EDT and lasted for approximately 36 minutes.
Investors Exchange (IEX) is a stock exchange in the United States. It was founded in 2012 in order to mitigate the effects of high-frequency trading. IEX was launched as a national securities exchange in September 2016. On October 24, 2017, it received regulatory approval from the U.S. Securities and Exchange Commission (SEC) to list companies. IEX listed its first public company, Interactive Brokers, on October 5, 2018. The exchange said that companies would be able to list for free for the first five years, before a flat annual rate of $50,000. On September 23, 2019, it announced it was leaving its listing business.
For three hours on August 22, 2013, trading was halted on the Nasdaq Stock Market. Trading on the exchange stopped at 12:14 pm and resumed at 3:25 pm, with 35 minutes left of trading for the day. One week after the trading halt NASDAQ OMX credited the freeze to an overloading of the Securities Information Processor (SIP) caused by reconnection issues with the New York Stock Exchange Arca. The freeze received substantial media coverage and generated discussions on the security of increasingly technologically advanced stock exchanges. The event coined the term "flash freeze" following the earlier "flash crash" on May 6, 2010.
A securities information processor (SIP) is a part of the infrastructure of public market data providers in the United States that process, consolidate, and disseminate quotes and trade data from different US securities exchanges and market centers. An important purpose of the SIPs for US securities is to publish the prevailing National Best Bid Offer (NBBO).
