NASDAQ and Electronic Systems

However, it is important, to emphasize that, for those companies that want to form part of the NASDAQ or NMS over the counter market levels, there are requisites of admission for quoting (based on the volumes) that are similar to those asked by other markets.

The societies whose securities are not negotiated very often or in great volumes are part of the market, which is denominated as “of the pink sheets”. They are called in this way because the information about the quotation of these securities that appears one a week is published in pink paper.  This information contains the demand and offer prices of a counter part company for a determined security.

It is only an oriented price data, that is, that it doesn’t indicate the price at which the operations have been done.

The MASQ has developed an electronic system called “over the counter market announcement board”, which has replaced in most part the pink sheets, only small companies use them.

Some societies that appear on the over the counter market announcement board is very speculative and they belong to the category of penny stocks. These securities are similar to a muddy terrain: once you step on it, it is very hard to get out.

However, there are also national companies that are growing and strong foreign companies that don’t awake any interest on the United States. These last are usually banks and other companies that in their places of origin are considered as trustworthy societies.

In fact, there are 440 foreign societies that are quoted at the stock exchange market. This permits for the investors to have in their portfolio worldwide securities without even leaving their homes.

These 440 foreign societies represent an annual volume of 9,000 million of securities. This is more or less equivalent to the average volume of two weeks of trading securities at the over the counter market.

Another level of the over the counter market is that which is formed by the NASDAQ, automatic quotation system of the NASQ. The NASDAQ is the organization that governs the over the counter market; AQ is the central computer in which the counterpart companies send their demand and offer prices of the securities of the different companies. The computer on his part remits the best demand and offer prices from the lot received.

This is what constitutes the NASDAQ quotation. The best buying price will be the highest, and the best selling price will be the lowest.

Due to the introduction of the automatic system, the differences between the demand and offer prices of the different counterpart societies have diminish considerably, which is a good sign of competition between does societies.

With the arrival of the national market system (NMS), the investors can receive   information about the quotations of a determined security the same as if they were at the market.

The norms of the NMS prescribe that the counter part societies have to inform the prices and volumes of their operations within the 90 seconds following to the transaction. Once more, the computers, makes it easier to accomplish this prescription. The NMS also has an automatic information system that receives orders of all sizes.

The SOES guarantees the automatic execution of up to 1,000 orders of the securities with best prices. The system, furthermore than to compare and to select the “orders with limits”, has the capacity to automatically   registered the price and volume of the operations.

Due to these technological advances, the great investors dominate the over the counter market environment almost as much as in the NYSE.

In 1998, the NASDAQ saw how the great investors began to control over 50% of the dealings of packages of securities, and that they possessed over a billion dollars in securities.

All these circumstances have made that, in these last years, the over the counter to become in a very active forum of negotiation,

During 1998, 5,400 companies from the NASDAQ negotiated more than 202,000 millions of securities, with a daily average volume of more than 800 million of securities.

According to NASQ, there were nine days in which each day the volume for 1,000 million of securities traded was surpassed, which means that the systems load was of 50% of the total of the securities traded in the United States.

Beginner Money Investing The New York Secondary Stock Exchange Market The "Over the Counter" Market NASDAQ and Electronic Systems The Chicago Options Market