Legal Definitions - National Association of Securities Dealers Automated Quotations (NASDAQ)

The National Association of Securities Dealers Automated Quotations (NASDAQ) is a prominent electronic stock exchange where shares of publicly traded companies are bought and sold. It operates as a global marketplace, primarily known for listing companies in the technology, biotechnology, and other growth-oriented sectors. Companies choose to list on NASDAQ to gain visibility, access capital from a broad range of investors, and provide liquidity for their shares, making it easier for investors to trade them. To be listed, a company must first be public (meaning it has completed an Initial Public Offering and complies with Securities and Exchange Commission regulations) and then meet NASDAQ's specific, rigorous requirements concerning financial health, shareholder base, and corporate governance standards.

• Example: "Innovate Robotics," a rapidly expanding company specializing in advanced manufacturing automation, has recently completed its Initial Public Offering (IPO). To attract a wider pool of investors interested in cutting-edge technology and to secure additional funding for its ambitious expansion plans, Innovate Robotics applies to list its shares on NASDAQ.

  Explanation: This illustrates NASDAQ's role as a preferred platform for growth-oriented technology companies to become publicly traded, offering them increased visibility and access to capital from a diverse investor base after they have met the initial requirements to become a public company.

• Example: "MediCure Solutions," an established pharmaceutical company known for its innovative drug discoveries, has been publicly traded for several years. To enhance the trading volume of its stock and attract more institutional investors who focus on the biotechnology sector, MediCure Solutions decides to transition its listing from a regional exchange to NASDAQ, provided it satisfies NASDAQ's stringent financial and corporate governance standards.

  Explanation: This demonstrates how NASDAQ serves as a desirable marketplace for established, innovative companies seeking greater investor exposure and improved liquidity for their shares, highlighting its reputation for listing leading companies in sectors like biotechnology.

• Example: David, an individual investor, is keen on investing in companies that are pioneers in sustainable energy. He uses his online brokerage account to search for and purchase shares of "EcoPower Dynamics," a company listed on NASDAQ that specializes in advanced wind turbine technology.

  Explanation: This example shows NASDAQ from an investor's perspective, illustrating its function as the actual electronic marketplace where individuals can easily buy and sell shares of publicly traded companies, particularly those in innovative and growth-oriented industries.