Key Takeaways
- The NASDAQ Global Market Composite is an international stock market index of 600 stocks from the NASDAQ Global Market.
- Stocks in this index must adhere to NASDAQ’s strict corporate governance and financial liquidity standards.
- The Global Market Composite is less exclusive compared to the Global Select Market Composite, encompassing a broader range of stocks.
The NASDAQ Global Market Composite is a stock market index that tracks companies listed on the NASDAQ’s Global Market tier. This index includes mid- to large-sized companies that meet certain rules, including minimum financial strength, share price, and trading activity. It isn’t as exclusive as the Global Select Market Composite, which has stricter requirements and features the largest and most financially stable firms.
An Overview of the NASDAQ Global Market Composite
The NASDAQ Global Market Composite stock market index was established by Nasdaq in 2006 when the NASDAQ National Market split into two tiers, the NASDAQ Global Market and the NASDAQ Global Select Market. It focuses on companies that do not possess the financial strength to be included in the Nasdaq Global Select Market Composite. The Global Market Composite is less exclusive than the Global Select Market Composite.
This change by NASDAQ was nominal, as it did not affect listing standards or alter the corporate governance standards and financial and liquidity requirements. The split was designed to reflect the global scope of the index and the companies listed on it.
Explaining the NASDAQ Tiers
The NASDAQ had three distinct tiers:
- The NASDAQ Global Select Market (NQGS)
- The NASDAQ Global Market
- The NASDAQ Capital Market
Requirements for inclusion in the NASDAQ Global Select Market are the most stringent, and requirements for the NASDAQ Global Market are more stringent than those for the NASDAQ Capital Market.
Corporate governance requirements are the same across all NASDAQ market tiers. All companies listed by NASDAQ must satisfy a variety of financial, liquidity, and corporate governance requirements, and while a company’s securities may qualify for initial inclusion, NASDAQ may deny a listing, when necessary, in order to protect investors and the public interest.
The performance of all NASDAQ tiers is based on market capitalization weights. As a result, the movement of common stocks of larger companies has a greater impact on the movement of each index as a whole.
Understanding the NASDAQ Global Select Market Composite
The NASDAQ Global Select Market index is a portfolio of securities issued by companies that meet the highest standards for financial and liquidity strength. The origin point of the NASDAQ Global Select Market Composite was the NASDAQ National Market Composite Index, which began in 1984 and was ultimately replaced by the NASDAQ Global Select Market Composite Index.
Exploring the NASDAQ Global Market Index
The NASDAQ Global Market Index is a portfolio of securities issued by companies that meet the NASDAQ standards for financial strength and liquidity. Companies that do not have the financial strength to be included in NASDAQ’s Global Select Market Composite are included in NASDAQ’s Global Market.
Insight into the NASDAQ Capital Market Composite
The NASDAQ Capital Market Index is a portfolio of securities issued by small-cap companies trading on NASDAQ. Nominally, these are smaller companies that indicate a need to raise additional capital. The listing requirements for the NASDAQ Capital Market are less stringent than the other NASDAQ markets.