What Was the Nasdaq National Market (Nasdaq-NM)?
The term Nasdaq National Market (Nasdaq-NM) referred to one of the market tiers of the Nasdaq. The Nasdaq-NM is what most people thought of when they referred to the Nasdaq. This tier was made up of more than 3000 companies whose base consisted of domestic and foreign shareholders. These companies also met stringent financial requirements and agreed to specific corporate governance standards in order to be included in this tier. The Nasdaq-NM was broken up into two new tiers in 2006, the Nasdaq Global Select Market and the Nasdaq Global Market.
- The Nasdaq National Market was one of the Nasdaq's two market tiers.
- It consisted of about 3,000 mid- and large-cap companies.
- Companies listed on this tier were required to meet stringent financial requirements and had to adhere to corporate governance standards.
- The Nasdaq NM was broken up into two new tiers in June 2006: The Nasdaq Global Market for mid-caps and the Nasdaq Global Select Market for large-caps.
Understanding Nasdaq National Market (Nasdaq-NM)
The Nasdaq is the largest electronic stock exchange in the world and the second-largest in the United States after the New York Stock Exchange (NYSE). The exchange succeeded over-the-counter (OTC) curb trading and has the highest trading volume in the world. This typically results in a more volatile trading environment than many traditional stock exchanges. It became recognized as a stock exchange by the Securities and Exchange Commission (SEC) in June 2006. More than 4,000 companies trade on the exchange.
Nasdaq is an acronym for the National Association of Securities Dealers Automated Quotation.
The Nasdaq National Market was one of two tiers that made up the exchange. Each tier consisted of companies that met specific listing and regulatory requirements. The Nasdaq-NM consisted of roughly 3,000 actively traded mid- and large-cap companies. The second tier was called the Nasdaq SmallCap Market. As the name implies, it consisted of small-cap companies or those with the potential for growth.
On June 23, 2006, the exchange announced that it broke up the Nasdaq-NM into two different tiers, creating three new ones. The change was made in order to align the exchange with its international reputation. Each tier was given a brand new name:
- Nasdaq Capital Market: formerly known as the Nasdaq SmallCap Market for small-cap companies
- Nasdaq Global Market: previously part of the Nasdaq National Market for about 1,450 mid-cap stocks
- Nasdaq Global Select Market: the newest tier, which was previously part of the Nasdaq National Market, and lists about 1,200 large-cap companies
Trading on the new third tier, the Nasdaq Global Select Market, officially began on July 3, 2006.
The listing and regulatory requirements for each tier are different and become more stringent. For instance, the Global Market tier requires companies to have:
- significant net tangible assets or operating income
- a minimum public float of 1,100,000 shares
- at least 400 shareholders
- a bid price of at least $4
Smaller companies that do not qualify for the Nasdaq National Market trade on the Nasdaq Capital Market. To list on the Nasdaq Capital Market, companies are required to have a net income standard of $750,000, a minimum public float of 1,000,000 shares, at least 300 shareholders, and a bid price of at least $4 with an exception that has certain requirements.
Listing on the Global Select Capital Market requires a minimum of at least 450 round lot or 2,200 total shareholders, a float of 1,250,000 shares, and a minimum bid price of $4.
The Nasdaq was established in 1971. It was the first stock exchange that listed companies electronically. At one point, it had about 5,000 listed companies that were traded. It was originally owned by the National Association of Securities Dealers (NASD), which eventually merged with the NYSE regulatory board to become the Financial Industry Regulatory Authority (FINRA). It is now a standalone company.
In addition to the stock market, as of 2018, the company also owns and operates several stock exchanges in Europe, including the Armenian Stock Exchange, the Copenhagen Stock Exchange, the Iceland Stock Exchange, the Riga Stock Exchange, and the Tallinn Stock Exchange. The company also owns and operates the Nasdaq OMX Group, which owns and operates stock exchanges based in Helsinki, Stockholm, and Vilnius in Lithuania.