INTRODUCTION

Location: New York City, United States Founded: February 4, 1971 No of listings: 2,872 Market capitalization: US $4.72 trillion Volume: US$982 billion Indexes: NASDAQ composite NASDAQ-100 NASDAQ biotechnology index

HISTORY
1971- Founded by National Association of Securities Dealers 1987- NASDAQ replaced the old telephonic trading system with the most efficient small Order Execution System(SOES) 1992- Joined the London Stock Exchange to form the 1st intercontinental linkage of securities markets. 2000- Went public and was renamed as NASDAQ Stock Market Inc. 2006-Changed from stock market to licensed National Exchange.

TRADING SCHEDULE
7.00AM-9.30AM- Pre Market trading session 9.30AM-4.00PM- Normal trading session 4.00PM-8.00PM- Post market session

QUOTE AVAILABILITY
NASDAQ quotes are available at three levels: Level 1 shows the highest bid and lowest offerthe inside quote. Level 2 shows all public quotes of market makers together with information of market dealers wishing to sell or buy stock and recently executed orders. Level 3 is used by the market makers and allows them to enter their quotes and execute orders.

 An electronic stock exchange based in India that is comprised of small- and medium-sized firms looking to gain access to the capital markets. Over the counter means trading across the counter in scrips. The counter refers to the location of the member or dealer of the OTCEI where the deal or trade takes place.

The first electronic OTC stock exchange in India. OTCEI was incorporated in October 1990 under Section 25 of the Companies Act, 1956. with the objective of providing a market for the Cos, that could not afford the listing fees of the large exchanges and did not fulfill the minimum capital requirement for listing It is recognised as a stock exchange under Section 4 of the Securities Contracts (Regulations) Act, 1956 The promoters are as follows: UTI, ICICI, IDBI, IFCI, GIC, SBI Capital Markets, Canbank Financial Services, LIC

Ringless and Screen-based Trading Sponsorship Transparency of Transactions Liquidity through Market Making Listing of Small and Medium-sized Companies Technology Nation-wide Listing Bought-out Deals

Need for OTCEI

Who would find OTCEI helpful?
High-technology enterprises Companies with high growth potential Companies focused on new product development. Entrepreneurs seeking finance for specific business projects

Benefits of getting listed on OTCEI The OTCEI encourages entrepreneurship. Small and medium closely-held companies can go public. Companies can get the money before the issue in cases of Bought-out-deals. It is more cost-effective to come with an issue of OTCEI.

Easy issue marketing by using the nationwide OTCEI dealer network. Nation-wide trading by listing at just one exchange.

Benefits of Trading on OTCEI for Investors

The OTCEI trading counters are easily accessible by any investors. The OTCEI provides greater confidence to investors because of complete transparency in deals.

At the OTCEl, the transactions are fast and are completed quickly. The OTCEI ensures security, liquidity by offering two-way quotes. The OTCEI is an investor friendly exchange with Single Window Clearance for all investor requests.

TRADING ON OTCEI
fully computerised set-up through a network of computers which are connected to a central computer at OTCEI, Mumbai. Initial allotment Buying Process in the Secondary Market Selling Process in the Secondary Market

The OTCEI Composite Index:

The OTCEI composite index has been introduced. as a broad parameter for investors and analysts. It acts as an indicator of the market movement. The base date for the OTC Composite Index is 23rd July, 1993 when the index was 100. The scrips included in the OTCEl composite index are only listed equities.

Market Makers on OTCEI

A market maker on the OTCEI is somewhat akin to a jobber on the regular stock exchange. Their job is to provide two-way-buy and sell-quotes for scrip and provide liquidity. The market makers analyze the companies and provide information . The market makers are required to give quotes for a minimum depth of three market lots.

Bought-out-deals on the OTCEI:

Floating public issue in the primary market involves a lot of formalities and a time lag . In case, where a company wants to get money earlier, it can find a member of the OTCEI, who would be interested in acting as a Sponsor for the Company to get it listed on the OTCEI. The member would later sell the shares of the company to the public through an offer for sale. This method of getting listed on OTCEI is also called a Bought-out-Deals. Sponsors can be authorised members of the OTCEI or a Merchant Banker. Thus, sponsors act as an important intermediary in mobilisation of savings.

Benefits to an OTCEI Member:

Sponsor can buy the shares of the company and sell it at a later time at a premium At the time of the issue, the sponsor need not appoint underwriters The sponsor can time the issue and come in the market There is no restriction on the holding period. For good projects, the sponsor can help the company to get premium in the market.

How do I buy an over-the-counter stock?

Process differs from NASDAQ & NYSE
STEPS

TO OPEN AN ACCOUNT WITH BROKER make a market buy order for an OTC stock the broker must contact the security's respective market maker. The market maker then will quote the broker the ask price The broker, then, will transfer the necessary funds to the market maker's account and is subsequently credited with the respective securities.

If the investor wishes to do so they can place limit or stop orders for OTC securities in order to implement price limits. A similar process is carried out when an investor decides to sell an OTC security. A word of caution: Although investing in OTC securities seems very simple, they are riskier than stocks listed on exchanges. OTC stocks are often from companies that are extremely small, with markets caps around $50 million or smaller.

DIFFERENCE BETWEEN

NASDAQ AND NYSE

Nasdaq market maker and a NYSE specialist

NASDAQ is determine as a high-tech market

Nasdaq is cost effective

Nyse is a typical market

NASDAQ is considered to have high volatility.

NASDAQ
National Association for Securities Dealers Automated Quotation

ADVANTAGES OF NASDAQ
It is now the largest firm in the world, as for average trades per day. A big chunk of its stock technology related, as compared to other stock exchanges. It has its own sets of indices. Various other sectors are taken care by several other indices clubbed together by NASDAQ. A beginners to the stock trade should not be under the impression that these indices are the guiding starts to profits. Indices just indicates; they just impel. They do not compel you to invest in a particular share of the company. As compared to NYSE, the NASDAQ rules and regulation for listing in stock exchange are liberal. It provides the facility of pre market trading. With NASDAQ , the need for jobbers and other market makers are eliminate as the traders can trade directly online

DISADVANTAGES OF NASDAQ
Currency risk Taxation Co-relation between Nifty and Nasdaq

MEANING
The small order execution system (SOES) was a system to facilitates clearing trades of low volume on NASDAQ.

ESTABLISHMENT OF SOES
SOES was first introduced in December 1988 for 25

stocks.
The lack of liquidity after the 1987 market crash led

NASDAQ to implement a mandatory system (since June 1988) to provide automatic order execution for individual traders with orders less than or equal to 1000 shares. (For stocks with low

volume, it may be less than 200 shares).

RULES
Trades may not be in excess of 1000 shares for a particular stock. SOES does not allow trades in stocks that are trading at prices greater than $250 per share. Once a trader receives an execution through SOES, they must wait 10 minutes to place a trade on the same side of the market in the same stock. Institutions and stock brokers are not allowed to place orders for their own accounts through SOES, but they can for a client's account. Market makers must honor their advertised bid/ask prices to SOES orders, provided that they are for the amount that the market maker is looking for.

INITIAL REACTION
Initially, when SOES was mandatory, it was met with heavy pessimism from NASDAQ member firms because it forced them to execute all SOES trades that met the market maker's advertised price. There were also significant limitations implemented to prevent day traders from exploiting the system and taking advantage of old prices quoted by market makers.

TYPES OF ORDER
1. MARKET ORDER: market order is an order to buy and sell a stock at the current market price 2. LIMIT OEDER: A limit order is an order to buy or sell a securities at a specific price 3. STOP ORDER: A stop order is a order to buy or sell a stock once the price of the stock reaches a specified price (the stop price) 4. STOP-LIMIT ORDER: A stop limit order is a order to buy or sell a stock that combines the features of a stop order or limit order. 5. MARKET-ON-OPEN(MOO) ORDER:A market-on-open order is a order to buy or sell a stock at a market opening price. 6. MARKET-ON-CLOSE(MOC) ORDER:A market-on-close order is a order to buy or sell a stock at a market closing price.

7.

TRAILING STOP: A trailing stop order is an order that allows a trail on your stop price 8. LOGICAL ORDER: A logical order is an order that will be submitted based on a set of criteria you define when entering the order, allowing for greater customization. 9. EXTENDED HOURS LIMIT ORDER: Extended Hours Trading is available outside of market hours from 7AM 9:30 AM ET and from 4PM 8PM ET

THE WORKING OF NASDAQ

The working of NASDAQ can be studied in three

stages:
1. The interface - The place where broker dealers and
market makers gain access to the system.

2. The matching engine - A computer that connects

buyers and sellers when their prices match.

3. Quote services - Data feeding the buy and sell price

quotes that NASDAQ provides.

Matching Engines
Matching Engine, on the NASDAQ exchange, is a single, highly reliable computer. It's where the actual trading takes place.

This machine, match buy order with a sell order from

someone else. If it can find a match, stock trade will take place. If not, trade will sit on the exchange waiting for a matching order.

Example on the working of Matching Engines

ABC company limited

Let's say three people want to sell their shares

of stock in the ABC company. Customer 1: sell 50 shares for $15.40 Customer 2: sell 200 shares for $15.25 Customer 3: sell 100 shares for $15.20

Now imagine that there are four people who

want to buy shares of the ABC company. Customer A: buy 100 shares for $15.15

Customer B: buy 200 shares for $15.10

Customer C: buy 150 shares for $15.00

Customer D: buy 75 shares for $14.95

 Customer 1: sell 50 shares for $15.40 Customer 2: sell 200 shares for $15.25 Customer 3: sell 100 shares for $15.20 Customer A: buy 100 shares for $15.15 Customer B: buy 200 shares for $15.10 Customer C: buy 150 shares for $15.00 Customer D: buy 75 shares for $14.95 The difference between the lowest selling price and the highest buying price is called the spread.

OVER THE COUNTER EXCHANGE OF INDIA

Now let's imagine that Customer A wants to buy 50 shares for

$15.25.

Customer 1: sell 50 shares for $15.40

Customer 2: sell 200 shares for $15.25

Customer 3: sell 100 shares for $15.20

The 100 shares available at the $15.20 sale price will be split 50 shares will remain in the list, while the other 50 will complete the transaction.

Quote Services
Under quote services, NASDAQ provides up-to-the-

minute price quotes through its computers

It provides Data about the buy and sell price quotes

that NASDAQ provides.

ROLE OF NASDAQ
Location, Location, Location Dealer vs. Auction Market Traffic Control Perception and Cost