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NASDAQ Global Market Composite: Meaning, Tiers

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Adam Hayes
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Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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Updated December 30, 2023
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Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.

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The NASDAQ Global Market Composite is an international stock market index comprising 600 stocks that represent the NASDAQ Global Market. Stocks in this index must meet NASDAQ’s strict corporate governance standards and financial and liquidity requirements. The Global Market Composite is less exclusive than the Global Select Market Composite.

Key Takeaways

  • The NASDAQ Global Market Composite is an international equity index containing 600 stocks in the NASDAQ Global Market.
  • The Composite is composed of three distinct tiers: The NASDAQ Global Select Market, the NASDAQ Global Market, and the NASDAQ Capital Market.
  • The Global Select Market differs from the Global Market in that it is more exclusive and must meet more stringent financial and liquidity requirements.
  • Companies in the Capital Market tier meet less stringent requirements and have lower levels of market capitalization compared to the other two tiers.

Understanding 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.

The NASDAQ Tiers

The NASDAQ had three distinct tiers:

  1. The NASDAQ Global Select Market (NQGS)
  2. The NASDAQ Global Market
  3. 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.

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.

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.

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.

Article Sources
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  1. Nasdaq. "NASDAQ Global Market Composite."

  2. Broom, Kevin D. "Tiered Market Structures: an Empirical Examination of NASDAQ." University of Mississippi, Electronic Theses and Dissertations, vol. 64, 2010, pp. 10, 44.

  3. Nasdaq. "The Nasdaq Stock Market Tiers."

  4. Broom, Kevin D. "Tiered Market Structures: an Empirical Examination of NASDAQ." University of Mississippi, Electronic Theses and Dissertations, vol. 64, 2010, pp. 6, 10, 108-109.

  5. Broom, Kevin D. "Tiered Market Structures: an Empirical Examination of NASDAQ." University of Mississippi, Electronic Theses and Dissertations, vol. 64, 2010, pp. 108-109.

  6. Broom, Kevin D. "Tiered Market Structures: an Empirical Examination of NASDAQ." University of Mississippi, Electronic Theses and Dissertations, vol. 64, 2010, pp. 10-11, 108-109.

  7. Nasdaq. "NASDAQ Global Select Market Composite, NQGS: Overview."

  8. Broom, Kevin D. "Tiered Market Structures: an Empirical Examination of NASDAQ." University of Mississippi, Electronic Theses and Dissertations, vol. 64, 2010, pp. 10, 108-109.

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