Stock market history


Stock exchange definition

A stock market, equity market or share market is the place or organization where bunch of buyers and sellers of stocks (also called shares) and other listed financial instrument get traded. In historic days, it was physical stocks buy-sell place but now a days with news age technology, most of the work is done in virtual platforms. Though physical trading still exit but mostly for big traders like banks, financial firms, etc.
At the close of 2012, the size of the world stock market (total market capitalization) was about US$55 trillion. By country, the largest market was the United States (about 34%), followed by Japan (about 6%) and the United Kingdom (about 6%).
There are a total of 60 stock exchanges in the world with a total market capitalization of $69 trillion. Of these there are 16 exchanges that have a market capitalization of $1 trillion each and they account for 87% of global market capitalization. Apart from the Australian Securities Exchange, all of these 16 exchanges are divided between three continents: North America, Europe and Asia.

Stock exchange in India

Stock exchange in India

Most of the trading in the Indian stock market takes place on its two stock exchanges: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The BSE has been in existence since 1875. The NSE, on the other hand, was founded in 1992 and started trading in 1994.
However, both exchanges follow the same trading mechanism, trading hours, settlement process, etc. At the last count, the BSE had about 4,700 listed firms, whereas the rival NSE had about 1,200. Out of all the listed firms on the BSE, only about 500 firms constitute more than 90% of its market capitalization; the rest of the crowd consists of highly illiquid shares.
How stock exchange works

How stock exchange works

Stock markets are a way for companies to raise the money they need to grow their businesses. They could choose to raise this money by taking on debt – but then they would have to pay a large amount of interest on that debt. Instead, they may choose to give away some of the company to strangers by “floating” (called as IPO) the company on the stock exchange. The people who buy these shares become part-owners of the company.
Once the company is floated on the stock exchange, the company’s new owners (known as shareholders) can buy or sell their shares in the company at any time when the market is open. For any transaction to take place, there must be a seller and a buyer. The price at which they can buy and sell these shares fluctuates during the day for a whole range of reasons, such as relative demand and supply for the shares, news and general mood in the market.
Stock Exchange is actually now very complex, the idea is far less so. In simple terms it is just a market where buyers and sellers meet in order to trade stocks.

History of stock exchange in India

History of stock exchange in IndiaThe first organized stock exchange in India was started in 1875 at Bombay and it is stated to be the oldest in Asia. In 1894 the Ahmedabad Stock Exchange was started to facilitate dealings in the shares of textile mills there. The Calcutta stock exchange was started in 1908 to provide a market for shares of plantations and jute mills.
Then the madras stock exchange was started in 1920. At present there are 24 stock exchanges in the country, 21 of them being regional ones with allotted areas. Two others set up in the reform era, viz., the National Stock Exchange (NSE) and Over the Counter Exchange of India (OICEI), have mandate to have nation-wise trading.
They are located at Ahmedabad, Vadodara, Bangalore, Bhubaneswar, Mumbai, Kolkata, Kochi, Coimbatore, Delhi, Guwahati, Hyderabad, Indore, Jaipur’ Kanpur, Ludhiana, Chennai Mangalore, Meerut, Patna, Pune, Rajkot.
The Stock Exchanges are being administered by their governing boards and executive chiefs. Policies relating to their regulation and control are laid down by the Ministry of Finance. Government also Constituted Securities and Exchange Board of India (SEBI) in April 1988 for orderly development and regulation of securities industry and stock exchanges.
Stock market history

Stock market history

In 12th-century France, the courtiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. Because these men also traded with debts, they could be called the first brokers.
A common misbelief is that in late 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurze, and in 1409 they became the “Brugse Beurse”, institutionalizing what had been, until then, an informal meeting, but actually, the family Van der Beurze had a building in Antwerp where those gatherings occurred. The Van der Beurze had Antwerp, as most of the merchants of that period, as their primary place for trading. The idea quickly spread around Flanders and neighboring countries and “Beurzen” soon opened in Ghent and Rotterdam.
In the middle of the 13th century, Venetian bankers began to trade in government securities. In 1351 the Venetian government outlawed spreading rumors intended to lower the price of government funds. Bankers in Pisa, Verona, Genoa and Florence also began trading in government securities during the 14th century. This was only possible because these were independent city-states not ruled by a duke but a council of influential citizens. Italian companies were also the first to issue shares. Companies in England and the Low Countries followed in the 16th century.
The Dutch East India Company (founded in the year of 1602) was the first joint-stock company to get a fixed capital stock and as a result, continuous trade in company stock occurred on the Amsterdam Exchange. Soon thereafter, a lively trade in various derivatives, among which options and repos, emerged on the Amsterdam market. Dutch traders also pioneered short selling – a practice which was banned by the Dutch authorities as early as 1610.
There are now stock markets in virtually every developed and most developing economies, with the world’s largest markets being in the United States, United Kingdom, Japan, India, China, Canada, Germany (Frankfurt Stock Exchange), France, South Korea and the Netherlands.
Functions of stock exchange

Functions of stock exchange

The stock market is one of the most important ways for companies to raise money, along with debt markets which are generally more imposing but do not trade publicly. This allows businesses to be publicly traded, and raise additional financial capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange affords the investors enables their holders to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as property and other immoveable assets. Some companies actively increase liquidity by trading in their own shares.

History of the American stock market

History of the American stock market

The American Stock Exchange (AMEX) got its start in the 1800’s and was known as the “Curb Exchange” until 1921 because it met as a market at the curbstone on Broad Street near Exchange Place. Its founding date is generally considered as 1921 because this is the year when it moved into new quarters on Trinity. However, it wasn’t until 1953 that it officially became the American Stock Exchange. External Link In November 1998, the National Association of Security Dealers External Link announced that the American Stock Exchange would merge with the National Association of Securities Dealers creating “The Nasdaq-Amex Market Group.” However, the American Stock Exchange remained as an active exchange.
In October 1, 2008, the American Stock Exchange was acquired by NYSE Euronext. NYSE Euronext integrated content and data into the website, phasing out, effective January 16, 2009. The new name is NYSE Amex.

The Author

Pramod Baviskar

Professional Market Trader And Owner Of Dalal Street Winners Advisory And Coaching Services. Working Since 2007 And Online Presence Since 2010. We Provide Highly Accurate And Professional 1 Entry And 1 Exit Future, Option, Commodity, Currency And Intraday Stock Tips On Whatsapp With Live Support And Follow Up.
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