EN
Nasdaq is one of the world's largest stock exchanges and is home to many leading global technology companies. It also powers the Nasdaq Composite Index, a widely tracked benchmark that reflects the performance of thousands of companies listed on the exchange.
Let us understand what Nasdaq is, how it works, and how Indian investors can invest in it.
Key Takeaways
-
Nasdaq is one of the world's largest stock exchanges by market capitalisation.
-
To list on Nasdaq stock exchange, companies must comply with its financial, governance, and regulatory requirements.
-
The Nasdaq Composite Index tracks eligible securities listed on the Nasdaq Stock Market.
-
Investors can gain exposure to the index through ETFs and mutual funds.
-
Indian investors can invest in Nasdaq-linked assets via the RBI's Liberalised Remittance Scheme (LRS) and the NSE IX at GIFT City.
What is Nasdaq?
Launched in 1971, Nasdaq is the world's first electronic stock exchange, providing an automated platform for buying and selling securities. It operates globally and supports trading across multiple markets.
Nasdaq is one of the world's leading stock exchanges and is known for listing many of the largest technology and growth-oriented companies, including Apple, Microsoft, Amazon, and NVIDIA.
Its fully electronic trading system enables fast and efficient order execution, making Nasdaq one of the most widely followed stock exchanges among investors worldwide.
How Does Nasdaq Work?
Nasdaq is an electronic stock exchange in the US where investors buy and sell shares through an automated trading network, like the NSE and BSE in India.
-
Companies list their shares on Nasdaq by meeting listing and regulatory requirements, including SEC registration and other financial standards. Nasdaq has different market tiers for listed companies, which is explained in the next section.
-
Trading is handled electronically. Market makers quote bid and ask prices, hold inventories of shares, and help match orders quickly, often within seconds.
-
The gap between the bid and ask price is called the spread, and market makers earn by managing that spread and their trade inventory.
How Can a Company List on Nasdaq?
Companies seeking to list on Nasdaq must complete an online application process, satisfy financial and corporate governance requirements, and pay the applicable listing fees.
The listing process generally takes 4 to 6 weeks, depending on the complexity of the application and the company's response to Nasdaq's review.
The application is submitted through Nasdaq's Listing Center and requires documents such as the listing application, listing agreement, corporate governance certification, symbol reservation form, and payment of the application fee.
Nasdaq offers 3 market tiers for listed companies:
-
Nasdaq Global Select Market: The highest listing tier with the most stringent financial and liquidity requirements.
-
Nasdaq Global Market: Designed for companies meeting established financial and governance standards.
-
Nasdaq Capital Market: The entry-level tier for smaller companies that meet minimum listing criteria.
Regardless of the market tier, companies must comply with Nasdaq's corporate governance standards, including maintaining a majority-independent board, independent audit and compensation committees, a code of conduct, and holding annual shareholder meetings.
Nasdaq Initial Listing Fees by Market Tier
Nasdaq charges different initial listing fees based on the market tier and the type of company seeking admission to the exchange.
|
Market Tier |
Initial Entry Fee |
Application Fee Included |
|
Nasdaq Global Select Market |
US$325,000 |
US$25,000 |
|
Nasdaq Global Market |
US$325,000 |
US$25,000 |
|
Nasdaq Capital Market (Up to 15 million shares outstanding) |
US$50,000 |
US$5,000 |
|
Nasdaq Capital Market (More than 15 million shares outstanding) |
US$75,000 |
US$5,000 |
|
Special Purpose Acquisition Companies (SPACs) |
US$80,000 |
US$5,000 |
Note: Companies listed on Nasdaq are also subject to annual listing fees after admission to the exchange.
What is the Nasdaq Composite Index?
The Nasdaq Composite Index is a market capitalisation-weighted index that includes all eligible domestic and international common-type stocks listed on the Nasdaq Stock Market. It is designed to measure the overall performance of securities listed exclusively on Nasdaq.
Eligible securities include common stocks, American Depositary Receipts (ADRs), ordinary shares, limited partnership interests, and shares or units of beneficial interest. Securities such as exchange-traded funds (ETFs), preferred stocks, rights, warrants, closed-end funds, convertible debentures, units, and other derivative securities are not included in the index.
How to Invest in the Nasdaq Composite Index?
Investors cannot invest directly in the Nasdaq Composite Index because it is a benchmark index rather than a tradable security. Instead, they can gain exposure to its performance through investment products such as exchange-traded funds (ETFs) and mutual funds that are designed to track the index.
These funds typically hold many of the same securities as the Nasdaq Composite in similar weightings, aiming to closely replicate its performance. This allows investors to participate in the returns of the index without purchasing every individual stock it contains.
How to Invest in Nasdaq from India?
As discussed above, Indian investors cannot invest directly in the Nasdaq Composite Index but can gain exposure to its performance through direct and indirect investment options.
Direct Investment Options
-
Global Trading Account with an Indian Broker: Several Indian brokerage firms offer access to US markets through partnerships with overseas brokers. Investors can open an international trading account to buy US-listed stocks, subject to the broker's terms and available investment options.
-
Overseas Trading Account with a Foreign Broker: Investors can also open an account with an international brokerage that accepts Indian clients. Before investing, it is important to review brokerage charges, currency conversion costs, and other applicable fees.
Indirect Investment Options
-
International Mutual Funds: These mutual funds invest in overseas markets, including the United States. Many international funds provide exposure to companies listed on Nasdaq.
-
Exchange-Traded Funds (ETFs): ETFs that track the Nasdaq Composite Index or other Nasdaq indices enable investors to participate in the performance of the underlying companies without purchasing individual stocks.
Investing in US Stocks Through GIFT City
Indian investors can also access US equities through the NSE International Exchange (NSE IX) at GIFT City, which commenced offering US stock trading to retail investors in March 2022.
Overseas investments are permitted under the Reserve Bank of India's Liberalised Remittance Scheme (LRS), which allows resident individuals to remit up to US$250,000 per financial year for eligible current and capital account transactions, subject to applicable regulations.
Conclusion
Nasdaq is one of the world's leading stock exchanges, known for its electronic trading system and broad range of listed companies. Understanding how Nasdaq works, its listing process, and the Nasdaq Composite Index can help investors make informed decisions. Indian investors can also gain exposure to Nasdaq-linked investments through eligible overseas investment routes, subject to applicable regulations.
Disclaimer: Access to US securities is offered via IFSCA Global Access route. Angel One Limited is registered with IFSCA as a Global Access Provider. Investment in securities market is subject to market risks, read all the documents carefully before investing. Any reference to securities is indicative and not a recommendation. Angel One Limited claims no right, title or interest therein, and no endorsement or affiliation is implied. Office address: Unit No. 256, Seats 1 to 4 located on the first floor of Pragya Accelerator II, Building -15B, Block – 15, Road No- 1C, Zone-1, GIFT SEZ, GIFT City, Gandhinagar – 382050. IFSCA Broker-Dealer Registration No. CMI2026BDK1061, GAP Registration No. IFSCA/GAP/BD/2026-2027/016.
