national association of securities dealers automated quotation

© Copyright 2004, The Nasdaq Stock Market, Inc. All rights reserved.

National Association of Securities Dealers Automated Quotation Presented by:

Ronald Dave BautistaAngelica Edonah L. BughaoChristine Joy P. DagohoyMaria Rizza R. DavidJoan Melissa GuceMary Joy M. TerrenalKeirth Jayson Y. Uy


A Market that Works for Investors

NASDAQ provides an open, transparent and competitive platform to enable buyers and sellers to efficiently interact and access pools of liquidity.


I. Introduction

• computerized system established by the NASD to facilitate trading by providing broker/dealers with current bid and ask price quotes on over-the-counter stocks and some listed stocks.

• NASDAQ does not have a physical trading floor that brings together buyers and sellers.

• all trading on the NASDAQ exchange is done over a network of computers and telephones.

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I. Introduction

• currently has a greater trading volume than any other U.S. exchange, making approximately 1.8 billion trades per day.

• The NYSE is still considered the biggest exchange because its market capitalization far exceeds that of the NASDAQ.

• well known for being a high-tech exchange, trading many new, high growth, and volatile stocks.

• NASDAQ is a publicly owned company, trading its shares on its own exchange under the ticker symbol NDAQ.

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I. Introduction

• The exchange is a dealers' market, meaning brokers buy and sell stocks through a market maker rather than from each other.

• A market maker deals in a particular stock and holds a certain number of stocks on his own books so that when a broker wants to purchase shares, he can purchase them directly from the market maker.

• NASDAQ National Market and the NASDAQ Small-Cap Market developed from 1982 to 1986, as the larger companies separated themselves from the smaller ones

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I. Introduction

• the stock exchange built the NASDAQ MarketSite in New York's Times Square to create a physical presence.

• The tower has a large outdoor electronic display, giving current financial information 24 hours a day.

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History

• developed in 1971

• first electronic stock exchange in the world.

• created as a means to increase the trading of Over-the-Counter stocks, those that were unable to meet listing requirements for larger exchanges.

• 2,500 OTC stocks were traded on the NASDAQ's first trading day, February 8, 1971.

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History

• 1990's - NASDAQ began to be seen as a competitor of the NYSE

• 1994 - NASDAQ beat the NYSE in annual shares traded

• 1998 - NASDAQ merged with the American Stock Exchange, which mostly traded options and derivatives, creating the NASDAQ-AMEX Market Group.

• The combined company still operates as two separate exchanges, but is better able to compete with the NYSE.

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Profile

• Address

–One Liberty Plaza, 50th Floor, New York, NY 10006

• Web Site

–www.nasdaq.com

• Trading Hours

–Monday - Friday, 9:30 am - 4:00 pm EST

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Profile

• Holidays

–New Year's Day, Martin Luther King Jr's Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.

• Securities

–Stocks

• Key Staff

–President and CEO: Robert Greifeld since May 2003

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NASDAQ: Three Levels

• Level 1: is for the customers who do not consistently trade which made them not a market maker and who usually want the current quotes on stocks.

• Level 2: is for the customers who consistently trade stocks which make the brokers to choose the market maker with the best bid and/or ask and make the deal.

• Level 3: is for the market makers who wants the level 2 but also needs the capability to change their own quotations

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Top 12 facts that make NASDAQ the stock market of choice for companies and investors.

1. NASDAQ is the stock exchange for industry leaders, recognized around the globe as one of the largest U.S. stock markets.

2. NASDAQ has significant reach in a broad range of industry sectors

– financial, industrial, healthcare and consumer companies comprise over 50% of NASDAQ listings.

3. NASDAQ has the world's highest listing standards.

4. NASDAQ is a global platform for capital formation.

5. NASDAQ is #1 on the NYSE.

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6. NASDAQ offers an exceptional product with lower listing fees.

7. Financial products based on NASDAQ Indexes offer unparalleled exposure for both large and small companies to institutional and retail investors.

8. NASDAQ companies benefit from NASDAQ's unmatched visibility properties.

9. NASDAQ provides comprehensive, unbiased trading analysis.

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10.NASDAQ Corporate Services provides listed companies unparalleled product and service support essential to being a publicly-traded company.

11.NASDAQ leverages customer feedback to drive continued innovation.

12.NASDAQ is a solid, well run and well regulated business.

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Why choose NASDAQ over the others?

• NASDAQ volatility is slightly lower than the NYSE, according to a May 2005 independent study by the U.S. GAO.

• NASDAQ maintains greater stability in times of market stress.

– When markets are unstable specialist firms reduce their risk by widening spreads, participating less, or halting the stock altogether. NASDAQ's spreads remain tight and as a result volume shifts to NASDAQ and other electronic markets.

• A NASDAQ stock with a $1B market cap, trading 1M shares per day saves $1.5 million in trading costs per year in comparison to a similar stock on the NYSE.

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© Copyright 2004, The Nasdaq Stock Market, Inc. All rights reserved. 16

Market Structure

Superior Trading Characteristics

Open, Competitive Market Delivering Best Executions for Investors

Greater Visibility

More Analyst Coverage (Multiple Market Maker System)

Better Services and Support

Insight and Analysis Tools for Trading, Ownership and Peer Comparisons

Superior Value for Listing $

Listing Fees are less on NASDAQ vs. NYSE

Why do Companies list on NASDAQ?


Consumer Discretionary

13%

Energy2%

Financials22%

Health Care17%

Industrials10%

Information Technology

28%

Materials2%

Utilities1%

TelecommunicationServices

2%Consumer Staples

3%

NASDAQ – National Industry Leaders

*Includes Companies included in NASDAQ’s Dual Listing Program


NASDAQ National Market Listing Requirements

1 For Initial listing under Standard 3, a company must satisfy one of the following: the market value of listed securities requirement or the total assets and the total revenue requirement. Under Marketplace Rule 4200(a)(19), listed securities is defined as “securities quoted on NASDAQ or listed on a national securities exchange.

2 Seasoned companies (those companies already listed or quoted on another marketplace) qualifying only under market value of listed securities requirement of Standard 3 must meet the market value of listed securities and the bid price requirement for 90 consecutive trading days prior to applying for listing.

3 Publicly held shares is defined as total shares outstanding less any shares held by officers, directors or beneficial owners of 10% or more. 4 Round lot holders are considered holders of 100 shares or more.5 An Electronic Communications Network (“ECN”) is not considered a market maker for the purposes of these rules.6 Marketplace Rules 4350 and 4351.

NASDAQ National Market Listing Requirements


$0

$100,000

$200,000

$300,000

$400,000

$500,000

1 5 10 15 20 50 100 200 Max.

NYSE Initial Fees

NASDAQ Initial Fees

NYSE Annual Fees

NASDAQ Annual Fees

Shares Outstanding (Millions)

Comparative Listing Fees

Source: Domestic listing fees for NASDAQ and NYSE; based on NASDAQ fees as of 01/02 and NYSE as of 01/03.

Initial & Annual Listing Fees ORIGINAL LISTING FEES[1] CONTINUING ANNUAL FEES [2]

NASDAQ NASDAQSHARES National National(MILLIONS) Market NYSE Market NYSE [3]

Up to 1 $100,000 $150,000 $21,225 $35,000 1+ to 2 $100,000 $150,000 $21,225 $35,000 2+ to 3 $100,000 $150,000 $21,225 $35,000 3+ to 4 $100,000 $150,000 $21,225 $35,000 4+ to 5 $100,000 $150,000 $21,225 $35,000 5+ to 6 $100,000 $150,000 $21,225 $35,000 6+ to 7 $100,000 $150,000 $21,225 $35,000 7+ to 8 $100,000 $150,000 $21,225 $35,000 8+ to 9 $100,000 $150,000 $21,225 $35,000 9+ to 10 $100,000 $150,000 $21,225 $35,000 10+ to 11 $100,000 $150,000 $26,500 $35,000 11+ to 12 $100,000 $150,000 $26,500 $35,000 12+ to 13 $100,000 $150,000 $26,500 $35,000 13+ to 14 $100,000 $150,000 $26,500 $35,000 14+ to 15 $100,000 $150,000 $26,500 $35,000 15+ to 16 $100,000 $150,000 $26,500 $35,000 16+ to 20 $100,000 $150,000 $26,500 $35,000 20+ to 25 $100,000 150,000+ to 154,600 $26,500 $35,000 25+ to 30 $100,000 154,600+ to 172,100 $29,820 $35,000 30+ to 50 $125,000 172,100+ to 242,100 $29,820 35,000+ to 46,500 50+ to 75 $150,000 242,100+ to 250,000 $39,150 46,500+ to 69,750 75+ to 100 $150,000 250,000* $51,750 69,750+ to 93,000100+ to 125 $150,000 250,000* $60,000 93,000+ to 116,250over 125 million $150,000 250,000* $60,000 116,250+ to 500,000**

[1] The original listing fee for NYSE is based on the total number of shares listed, including all shares issued and outstanding, as well as shares

reserved by the Board of Directors for a specific future issuance. The original fee for NASDAQ National Market is based on total shares

outstanding and applies to all domestic issuers and only foreign issuers listing ordinary shares.

Fees include one-time initial listing charges of $5,000 for NASDAQ National Market,

$36,800 for NYSE, applied for the first class of securities listed by an issuer.

[2] Newly listed companies are billed the annual fee on a pro-rata basis at the end of the calendar year in which they are listed.

[3] NYSE annual fees payable are the greater of amounts shown under a minimum fee schedule or a fee applied on a per share basis.

* The initial fee component of the original listing fee for common shares is capped at $250,000, including the $36,800 special charge.

** Maximum $500,000 annual listing fee applies to all securities listed by an issuer, other than derivative products, fixed income products,

and closed end-funds.

Source: Domestic listing fees for NASDAQ and NYSE; based on fees as of January 2003.

NASDAQ has lower listing fees for all levels of shares outstanding

Listing Fees


NASDNational Association of

Securities Dealers


History

• watches over the NASDAQ to make sure the market operates correctly

• self-regulatory organization of the securities industry responsible for the operation and regulation of the NASDAQ stock market and over-the-counter markets.

• administrated exams for investment professionals, such as the Series 7 exam.

• In 2007, the NASD merged with the New York Stock Exchange's regulation committee to form the Financial Industry Regulatory Authority, or FINRA.

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The Rules of Fair Practice

• NASD’s most important rules are those designed to maintain high standards of conduct.

• Depending on the offense, a member found guilty of infractions of these rules may receive a penalty as mild as censure, or may receive a fine, a suspension, or even expulsion from the Association.

• Expulsion is the ultimate penalty because an expelled member would find it virtually impossible to carry on a profitable business outside the NASD.

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Overview

• NASDAQ OMX Group, Inc. is the world's largest exchange company.

• delivers trading, exchange technology and public company services across six continents, with approximately 3,700 listed companies.

• offers multiple capital raising solutions to companies around the globe.

• NASDAQ OMX technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries

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Overview

•The world's largest IT industry exchange, with a total market value over $2 trillion.

•The world's largest biotech industry exchange, with total market value at almost $270 billion.

•The world's largest paper product industry (part of the materials sector) exchange at a market value over $32 billion.

•NASDAQ OMX is number one geographically in major-worldwide listings, with approximately 3,700 companies in 50 countries representing $4.1 trillion in total market value.

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NASDAQ OMX Business Areas

• Global Data Products

• Global Index Group

• Listings-Corporate Client Group

• Transaction Services Nordics

• Transaction Services U.S.

• Corporate Services

• Market Technology

• NASDAQ OMX Europe

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END

Presented to:Ms. Elizabeth Vivien MagbataProfessor in Capital Markets

national association of securities dealers automated quotation

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