NASDAQ is one of the world’s largest stock exchanges and was the first exchange to operate entirely through an electronic trading system. It includes companies from a wide range of sectors, including technology, healthcare, consumer goods, and financial services.
Indian residents may gain exposure to companies listed on NASDAQ through permissible overseas investment routes, subject to applicable regulations, including the Liberalised Remittance Scheme (LRS) framework of the Reserve Bank of India.
Understanding the NASDAQ meaning can help investors gain insights into global financial markets. Unlike traditional stock exchanges that historically relied on physical trading floors, NASDAQ operates through a fully electronic trading platform.
It is also important to distinguish between NASDAQ as a stock exchange and NASDAQ indices. The exchange facilitates trading in more than 3,000 listed companies, while various indices track the performance of selected groups of securities.
For investors exploring international investment opportunities, understanding how NASDAQ functions can provide valuable perspective on overseas equity markets.
How Does NASDAQ Work?
NASDAQ operates as a fully electronic dealer market in which market makers continuously provide buy and sell quotations for securities. Unlike conventional auction-based exchanges, NASDAQ uses a computerized trading system to facilitate transactions.
The exchange functions without a physical trading floor and relies on technology-driven infrastructure for trade execution.
Dealer Market System
NASDAQ employs market makers who are independent dealers that agree to buy and sell specific securities at publicly quoted prices. These participants contribute to liquidity and support orderly market operations.
Electronic Trading System
Transactions are executed through the computerized trading network of NASDAQ, eliminating the need for a physical trading environment.
Competition Among Market Makers
Multiple market makers may compete for orders in the same securities, which can contribute to improved pricing efficiency and market liquidity.
Nasdaq Composite Index
Apart from facilitating trading activities, NASDAQ is associated with several market indices, including the NASDAQ Composite Index, which tracks the performance of a broad range of domestic and international companies listed on the exchange.
NASDAQ Trading Hours
Investors participating in US markets may find it useful to understand the trading hours of NASDAQ. Trading sessions are based on US time zones and may vary during the year because of Daylight Saving Time adjustments in the United States.
NASDAQ Trading Timings
| Trading Session | US Time (EST) | Indian Time (IST) – Summer | Indian Time (IST) – Winter |
|---|---|---|---|
| Pre-Market Trading | 4:00 AM – 9:30 AM | 1:30 PM – 7:00 PM | 2:30 PM – 8:00 PM |
| Regular Trading Hours | 9:30 AM – 4:00 PM | 7:00 PM – 1:30 AM | 8:00 PM – 2:30 AM |
| After-Hours Trading | 4:00 PM – 8:00 PM | 1:30 AM – 5:30 AM | 2:30 AM – 6:30 AM |
Regular trading hours generally witness comparatively higher trading volumes and liquidity levels. Trading during pre-market and after-hours sessions may involve relatively lower liquidity and increased volatility.
How to List Scrips on NASDAQ?
Companies seeking admission to NASDAQ must meet specified financial, liquidity, and corporate governance standards prescribed by the exchange. Listing requirements differ across NASDAQ’s market tiers, including the Global Select Market, Global Market, and Capital Market, and are subject to periodic revisions.
Prospective issuers should review the latest exchange guidelines and listing rules before initiating the application process.
1. Financial Viability
Companies are generally required to satisfy prescribed benchmarks relating to revenue, net income, market capitalization, or cash flow. The specific criteria depend on the chosen market tier and listing standard selected by the issuer.
2. Liquidity Requirements
Issuers must maintain a minimum number of publicly held shares and meet shareholder distribution norms. This ensures adequate market depth and public participation in trading of the security.
3. Share Price Requirements
Minimum bid price thresholds apply at the time of listing. The required price varies by market tier and must be maintained to meet continued listing standards under exchange rules.
4. Corporate Governance Standards
Listed entities are expected to comply with governance requirements concerning board composition, independent directors, audit committees, financial reporting, and disclosure practices. These standards promote transparency and investor protection.
Note: Listing on NASDAQ does not guarantee market performance. Companies must also meet continued listing requirements to remain on the exchange.
How to Invest in NASDAQ from India?
Indian residents may invest in overseas securities through permissible channels under prevailing regulatory provisions.
Under the Liberalised Remittance Scheme (LRS) framework issued by the Reserve Bank of India, resident individuals may remit funds overseas within prescribed annual limits applicable at the time of investment.
The following avenues may provide exposure to companies listed on NASDAQ.
1. Direct International Brokerage Accounts
Certain intermediaries provide access to overseas markets through international trading accounts. Investment features and available products may vary depending on the service provider.
2. Domestic Mutual Funds
Some mutual fund schemes provide exposure to international equities and global market indices. Availability depends on scheme objectives, regulatory provisions, and prevailing limits.
3. Exchange Traded Funds (ETFs)
Certain exchange traded funds listed in India may offer exposure to international equity markets and global benchmarks. Investors should review fund objectives, costs, and associated risks before investing.
4. Portfolio Management Services
Portfolio management services may offer opportunities for international diversification to eligible investors, subject to investment thresholds, product suitability considerations, and regulatory requirements.
Investors should consider market risks, taxation implications, currency fluctuations, and their investment objectives before making investment decisions.
Conclusion
NASDAQ is one of the world’s largest stock exchanges and plays an important role in global capital markets by providing an electronic platform for trading securities across various sectors.
For Indian investors, international investing may offer portfolio diversification opportunities. However, overseas investments are subject to market volatility, foreign exchange fluctuations, taxation considerations, and applicable regulations. Understanding NASDAQ can support informed evaluation of international market opportunities.
FAQs on NASDAQ
What is the full form of NASDAQ?
The NASDAQ full form is the National Association of Securities Dealers Automated Quotations. It was established as an electronic quotation system designed to enhance trading efficiency.
How many companies are listed on NASDAQ?
More than 3,000 companies are listed on NASDAQ, representing sectors such as technology, healthcare, consumer services, financial services, and industrial businesses.
What is the difference between NSE and NASDAQ?
The NSE is an Indian stock exchange where securities are traded in Indian rupees and regulated by the Securities and Exchange Board of India (SEBI).
NASDAQ is a US-based stock exchange where securities are traded in US dollars and regulated by the US Securities and Exchange Commission (SEC).
What is the difference between NASDAQ and NYSE?
The NYSE traditionally operates as an auction-based market and maintains a physical trading floor.
NASDAQ primarily functions as an electronic dealer market supported by market makers and computerized trading systems.
Can I buy on BSE and sell on NASDAQ?
Generally, securities listed exclusively on Indian exchanges cannot be traded directly on NASDAQ. Cross-border trading depends on listing structures, depository arrangements, and regulations applicable in the respective jurisdictions.
Is NASDAQ safe to invest in?
NASDAQ operates within a regulated market environment overseen by the US Securities and Exchange Commission (SEC). However, investments in securities listed on the exchange remain subject to market volatility, sector-specific risks, foreign exchange fluctuations, and other investment-related considerations.
Investors should assess their financial objectives, investment horizon, and risk tolerance before investing.
Disclaimer
This article is intended solely for informational and educational purposes and should not be construed as investment advice, a recommendation, or a solicitation to buy or sell securities. Overseas investments involve market risks, foreign exchange fluctuations, taxation implications, and regulatory requirements. Investors should consult qualified financial, legal, or tax professionals before making investment decisions.
