The History of the Stock Market

Trade is not something that can be attributed to one person or people. When we talk about trading we are talking about the earliest forms of financial compensation. The practice of exchanging goods and services for other goods and services dates back to the earliest, most primitive forms of human civilization.

However, the stock market is not necessarily synonymous with trading. Rather, what defines stock trading is purchasing certain assets in anticipation that their future price might grow and net one a profit. So, how did this particular practice come to be? In this article, we take a look at the answer to this question.

Early Forms and Predecessors

The earliest form of the stock market, a sort of prelude to what is to come, came about in the late 1400s and early 1500s. It occurred in Antwerp (in modern-day Belgium). The self-governing city became a center for trade, with European merchants from all over the continent passing through its gates. It was within this city that certain savvy merchants would purchase goods, knowing, or at least hoping, that their value would accumulate over time, and they would gain profits. Certainly, a far cry from the big stock markets that anyone can access through online trading platforms today. However, we can certainly see the seeds being planted.

In 1611, however, we can see the first ever modern iteration of the stock market. The Dutch East India Company was first established in 1602. The Dutch government gave the company a 20-year monopoly on any and all trade with Asia, which made the company one of the most powerful entities in the world at the time, even granting it a certain degree of governmental power. For all intents and purposes, it was the first multinational corporation in the world. It was also the first corporation to sell its stocks to private citizens, meaning it was the first company to start the stock exchange craze which would only grow in popularity in the future.

The Start of the Stock Exchange

When we talk about stocks, there is one name or phrase that inevitably pops to mind. That phrase, of course, is Wall Street. The street has become synonymous with the stock market, especially with the famous / infamous New York Stock Exchange (which is situated on the street). But, how did the New York Stock Exchange get its start?

In the late 1700s, the securities business in New York was disorganized and in need of reforms. It was in the 1790s that about two dozens of New York’s savviest merchants gathered in secret to talk about ways to bring order to the chaos. It was this discussion that led to the signing of the so-called Buttonwood Agreement, supposedly named as it was signed under a buttonwood tree. The agreement relied on two provisions. The first was that the brokers gathered would only deal with each other, and eliminate any auctioneers in the process. The other is that the commissions were to be 0.25%.

It was this momentous occasion that led to the creation of the New York Stock Exchange that we all know about today. It is the most popular stock exchange market, and it grows in popularity among new traders every year.

Most Popular Stock Exchanges Today

We already have talked about the NYSE and the popularity and fame it enjoys. However, the success of Wall Street has led to the creation of similar stock exchanges all over the world, which have garnered quite a bit of popularity and achieved massive success. One such stock exchange is the NASDAQ market, which also is situated in New York City, and is the second biggest stock exchange in the world, by market capitalization. Apart from the two New York-based stock exchanges, there are a number of hugely popular stock exchanges situated all over the world. Let us take a look at the most popular ones now.

The Tokyo Stock Exchange is the biggest stock exchange in Japan, and the biggest in all of Asia. While not nearly close to Wall Street or NASDAQ, it is incredibly large, with a market capitalisation exceeding $6 trillion. For other Asian markets that have achieved massive success, we need look no further than China, with the Hong Kong Stock Exchange and Shanghai Stock Exchange taking up the spot as the 3rd and 2nd biggest Asian stock exchange markets.

European traders will be familiar with stock exchanges such as the London Stock Exchange, which is the biggest UK-based stock exchange, as well as the biggest European market. However, it is not the only one. And of course, the European Low Countries that started it all have their own representative. The Euronext Stock Exchange is situated in Amsterdam, and is one of the biggest in the world, spanning multiple European nations, including France, the UK, and, of course, Belgium and the Netherlands, among others.