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February 1, 1999

Nasdaq: A Timeline

By Monica Simms

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1963 - The Securities and Exchange Commission releases a study finding the over-the-counter market in need of improved regulation, and proposes that the market be automated. The SEC allows the National Association of Securities Dealers to run the market. At the time, all market activity is handled entirely over the telephone and via physical delivery of certificates. No central place exists to obtain fair market quotes.

1968 - The NASD retains Bunker-Ramo Corp. to help design and build a new, automated system to be called the NASD Automated Quotation, or Nasdaq. Cost for the five-year project is estimated at $25 million.

1971 - On Feb. 8, Nasdaq begins operations, displaying representative quotes for more than 2,500 OTC securities.

1972* - Shares traded for the year: 2.2 billion. Index close: 133.73.

1974* - Shares traded for the year: 1.1 billion. Index close: 59.82.

1976 - The NASD purchases the new system from Bunker-Ramo for approximately $10 million.

1977 - Steven Wozniak and Steven Jobs of Apple Computer introduce first low-priced, mass-produced personal computer.

1980 - Nasdaq replaces Bunker-Ramo terminals with new PC-based computers provided by the Harris Corp. PCs feature single-page viewing of inside quotes - the best bid and offer prices - reducing price spreads on more than 85 percent of Nasdaq stocks.

1981 - International Business Machines (IBM) introduces PCs featuring user-friendly graphical interface from then unknown software provider Microsoft Corporation.

1982 - The National Market System (NMS) is formed, and includes the top Nasdaq stocks with new, specialized listing requirements. Trades are now subject to continuous real-time reporting. Shares traded for the year: 8.4 billion. Index close: 232.41

1984 - Nasdaq rolls out Small Order Execution System (SOES) for executing small orders of 1,000 shares or less against the best quotations.

1986 - A second NASD operations center is opened in Rockville, Md as a full backup to the main facility housed in Trumbull, Conn.

1987 - Nasdaq rolls out its workstation service PC-based platform with customization features and dynamic data updating via a continually-broadcast feed.

1988 - The Advanced Computerized Execution System (ACES), a proprietary order-routing system, is introduced. The OTC Bulletin Board for posting information about Nasdaq securities is introduced.

1990 - SelectNet, an online screen-negotiation and execution system, is introduced for orders too large to be handled by SOES. The system does not place size limits on orders, and is not an automatic-execution system, like SOES. SelectNet provides messaging between market participants who are negotiating prior to trading. Nasdaq initiates a five-year, $180 million upgrade of its core information-technology infrastructure, including its AT&T network backbone.

1991 - Shares traded for the year: 41.3 billion. Index close: 586.34. Nasdaq International Service begins, with Nasdaq NMS securities trading in early U.S. hours while London financial markets are open.

1993 - Nasdaq replaces Unisys 1100s with Unisys 2200 mainframes capable of handling more than 500 transactions per second. Nasdaq's network had begun to buckle under its own weight, with volumes growing exponentially each year.

1994 - In Aug., a squirrel causes a 30-minute trading interruption after it gnawed through a transformer line near the Trumbull data center. Oct. and Nov., the U.S. Justice Department and the SEC open investigation into possible price fixing and other illegal trading practices among Nasdaq dealers and traders. Nasdaq volume surpasses that of the New York Stock Exchange in annual share volume for the first time ever. Shares traded for the year: 74.3 billion. Index close: 751.96.