NASDAQ Overview: NASDAQ originally stood for National Association of Securities Dealers Automated Quotations. The NASD is a financial industry self-regulatory organization, one of whose longstanding missions has been to regulate trading in "over the counter" stocks, equity securities each traded by a variety of securities dealers (also called market makers), rather than centrally on a securities exchange, such as the New York Stock Exchange.
NASDAQ initially was a technical innovation gathering real-time transaction prices from all the dealers in the largest, most actively traded over the counter stocks. The impetus was to make trading in these stocks more attractive versus stocks on the major exchanges, where real-time transactional information had been available for many decades.
Eventually, NASDAQ has evolved into a quasi-market of its own, allowing investors and their financial advisors to find the best price available for any NASDAQ-listed security with up-to-moment accuracy, and thus to place their trades with the dealer offering that best price, or best execution. Moreover, the number of securities whose prices are gathered by the NASDAQ system has grown from a relative handful into the vast majority of U.S. equities.
