The Evolution Of The Stock Exchange

The New York Stock Exchange on Wall Street

Stock exchange is simply defined as a place where stock is sold and bought. But considering that we are already in the modern dispensation, the largest stock exchange in the world — the New York Stock Exchange – is definitely more than what the eyes could see.

The New York Stock Exchange (NYSE) is situated at Wall Street, Manhattan, New York City, USA. Considered as the world’s largest stock exchange, the market capitalization of the listed companies traded is estimated at around US$12.25 trillion (May 2010 figures) with average daily trading turn-over of roughly US$153 billion (based in 2008 figures).

Today, aside from stocks, also traded are bonds, securities, commodities and countless other financial instruments. It is interesting to note that NYSE is already considered as a tourist magnet because of its popularity with visitors from around the globe.

People are attracted with the history of the market as well as the magnificent collective wealth and financial clout exhibited within its walls. It is no wonder why tourists going to New York make it a part of their itinerary to see the stock exchange.   It is indeed amazing to know that what started in a dirt road trading post on a small village ended up in a landmark monolith like what we are seeing now in the New York Stock Exchange.

Though some are raising their doubts as to the exact site of the very first stock exchange, the recognized birthplace is believed to be in Cairo, Egypt. And it started in the 11^th century. Jewish and Islamic merchants were known to be dealing with stock and commodities trading. Of course, this is contrary to the traditional notion that Italians were the inventors of the stock market.

Stock brokers came into existence back in France in the 12^th century. An individual called as the courratier de change was saddled with the work of regulating and supervising the debts and funds of different agro-based communities attached to the local banking system.

By the following century, French commodity traders came into the scene more closely knitted as groups meeting regularly to trade. And soon, the idea spread throughout Western Europe.

The first proof of trading of government securities was perceived to have been done by Venetians in the 13^th century. The Venice government soon realized the problems of traders spreading rumours to intentionally depress the prices of government-issued securities. Consequently, the government outlawed the practice with penalties for those proven doing the same.

In the following centuries, it was the Dutch’s stock exchange that allows their   shareholders to share a piece of profits, and losses.  The scheme of non-stop trading was started by the Amsterdam Stock Exchange in the 17^th century.

Indeed, the path all the way from the old dusty marketplace to the modern organized stock exchange can be described as rocky ride. But throughout the centuries, the evolution is quite apparent.

As new technologies emerged, the current trend of going away from the traditional floor-based trading to computerize trading present a new challenge and a new chapter to the ever-changing history of stock exchange.

Definitely nobody knows for sure what the stock exchange of the future might appear but one thing is sure — the market will continue to grow and transform over periods of time.

Welcome investors!