Nasdaq Global Select Market: Definition & Key Information

The Global Select Market includes companies with the largest market capitalization within the Nasdaq Composite Index and comprises 1,200 stocks. It is one of the three tiers within the Nasdaq Composite Index, along with Global Market and Capital MarketNasdaq Capital MarketThe Nasdaq Capital Market is one of the three tiers within the Nasdaq Composite Index. The Capital Market tier is an equity market for.

In order to be part of the Global Select Market tier, a company must be able to meet certain financial requirements, liquidity requirements, and governance standards. it is known for being the most exclusive tier. Every year, Nasdaq reviews the mid-capitalization tier, Global Market, and evaluate whether any of the stocks within that tier are eligible for listing on the Global Select Market.

Summary

• The Nasdaq Global Select Market is one of three tiers within the Nasdaq Composite Index, with the other two tiers being the Capital Market and Global Market.
• The Global Select Market includes companies with the largest market capitalization within the Nasdaq Composite Index and comprises 1,200 stocks.
• For a company to become part of Nasdaq’s Global Select Market, it must fit into the strict financial and liquidity requirements. 

Requirements and Criteria

For a company to become part of Nasdaq’s Global Select Market, it must fit into the strict financial and liquidityLiquidityIn financial markets, liquidity refers to how quickly an investment can be sold without negatively impacting its price. The more liquid an investment is, the more quickly it can be sold (and vice versa), and the easier it is to sell it for fair value. All else being equal, more liquid assets trade at a premium and illiquid assets trade at a discount. requirements. There are four different standards, and a company must be able to meet at least one.

For example, one standard for the financial requirements is based on capitalization with revenue. In such a case, for a company to be eligible, they need to average more than $850 million in the prior 12 months in terms of their market capitalization.

Additionally, the company’s previous fiscal year revenue must be above $90 million. However, if it can’t reach the standard, it can also be evaluated through three other standards – earnings, capitalization with cash flow, or assets with equity. In terms of the liquidity requirements, there are a few different standards to assess eligibility, i.e., IPOs versus seasoned companies.

Fees

The entry fees to be listed on the Nasdaq Global Select Market vary depending on the total shares outstanding. The listing comes with a $25,000 application fee, along with an entry fee, which ranges from $150,000 to $295,000.

In addition to the entry fees, there is an inclusive annual fee that varies depending on the total shares outstandingOutstanding SharesOutstanding shares represent the number of a company’s shares that are traded on the secondary market and, therefore, available to investors. Outstanding shares include all restricted shares held by the company’s officers and insiders (senior employees), as well as the equity portion owned by institutional investors. The annual fee ranges from $46,000 to $159,000.

Importance of the Global Select Market Tier

The Global Select Market tier is important because investors use it to rank the size of a company and to understand its market capitalization. It helps identify which companies are part of the Nasdaq Composite Index top tier. It will explicitly show the companies within the technology sector with the largest market capitalization.

Additional Resources

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