History Of The Stock Market

Stock markets are one of the most talked about subjects in the world today.

So as a well-informed individual, it’s imperative to know everything you can about the stock market, isn’t it?

This is where I come in.

I’m going to break it down and tell you a brief history of stock markets.

Stock or share is referred to indicate an investor’s ownership in a corporate organization. The owners of such instrument are known as the stockholders or the shareholders. A shareholder owns a percentage share in the ownership of the company.

The trading of shares of a company at a higher or lower price is determined by the profitability and the financial position of the company.

The trading of debt and commodities started in the middle ages while the concept of share market began in the late 16^th century. The share markets started when countries began to trade with each other.

Many businessmen wanted to commence business on a wide scale and thus required huge amounts of financial resources which were difficult to be raised by self. Eventually, a group of investors accumulated their savings together and became partners in business and co-owners with individual shares in their businesses so as to form companies.

New York Stock Exchange, USA (Image source: kids.britannica.com)

WORLD’S FIRST STOCK EXCHANGE

Do you know where the concept of stock exchanges originated?

Guess.

The concept of joint-stock companies was originated in the Netherlands which eventually became a feasible business model for many businesses facing the struggle in their operational activities.

In the year 1602, the first paper shares were used by the Dutch East India Company. Such shares could be conveniently bought by a shareholder and eventually could be conveniently sold by him/her to another person. As a result, trade in the company’s shares occurred on a continuous basis in the Amsterdam Exchange of the Netherlands.

Soon after this, trading in various derivatives which included options and reports started to take place in the same stock exchange. The Dutch traders were the pioneers of short selling.

Short selling is the trading style where traders

Buy the stock at a higher price and sell it at a lower price then again buy it.

Eventually, in the early 1610 such practice was made banned by the Dutch authorities.

Amsterdam Stock Exchange, Netherlands.

India’s first stock exchange:

Bombay Stock Exchange (also known as BSE) is the first stock exchange in India. It had a very humble beginning. BSE was started by 5 stock brokers under a banyan tree & then they moved to Dalal Street and formed an official organization in 1975. Today, more than 5000 companies are listed on BSE. It has launched its own IPO recently in January 2017. Now, BSE is also listed on BSE. It is is the second largest stock exchange in India after NSE and oldest stock exchange in India and Asia.

EXPANSION OF THE STOCK MARKET

The Amsterdam Stock Exchange is the first stock exchange in the history of the stock market in the world.

That’s right.

The first stock exchange in the history of the world was in Amsterdam.

Fascinating, right?

The idea of the stock market eventually gained great success and it became popular in the other European countries like Portugal, Spain and France. Later on, the idea was acknowledged by England as well.

The volume of shares traded started to increase and the need for an organized marketplace for the trading of such shares started to be felt. So, the stock traders decided to meet at a London coffeehouse which was used by them as a marketplace.

Eventually, in 1773, London coffeehouse came to known as London Stock Exchange. This was the world’s first stock exchange. Later on, a stock exchange in Philadelphia of the USA in 1790 was established.During May 17, 1792, the stock market on the Wall Street of the USA was opened. Twenty-four brokers started the market by signing the Buttonwood Agreement in New York. On March 8, 1817, the stock exchange came to be known as the New York Stock Exchange.

National Stock Exchange, India (Image source: business-standard.com)

CONCLUSION

Now a day, one can find stock markets in almost every developed and developing economies. The world’s largest markets can be found in the United States, United Kingdom, Japan, India, China, Canada, Germany, France, South Korea and last but not the least, the Netherlands. The stock markets across the world are all working as pillars for the business houses by providing them with financial resources for their operations and expansions.

Apart from that, the stock market allows individuals to create their personal wealth by trading and investing in diverse financial instruments.

You know you’ll find a lot of information on how to trade in stocks and which companies to invest in.

It’s all very technical.

But it’s also very important to know where and how it all started. Hence this article.

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