When people talk stocksthey are usually talking about companies listed on the major stock exchanges like the New York Stock Exchange NYSE or the NASDAQ. The major American companies are listed on the NYSE, and it can be difficult for investors to imagine a time when the NYSE wasn't synonymous with investing.

But, of course, it wasn't always this way; there were many steps along the road to our current system of exchange. You may be surprised to learn that the first stock exchange thrived for decades without a single stock being traded.

In this article, we will look at the evolution of stock exchangesfrom the Venetian States to the British coffeehouses, and finally to the NYSE and its brethren.

To skip the history lesson and jump straight into current events, check out Getting To Know Stock Exchanges. The money lenders of Europe filled important gaps left by the larger banks. Moneylenders traded debts between each other; a lender looking to unload a high-risk, high-interest loan might exchange it for a different loan with another lender.

These lenders also bought government debt issues. As the natural evolution of their business continued, the lenders began to sell debt issues to customers - the first individual investors. In the 's, the Venetians were the leaders in the field and the first to start trading the securities from other governments. They would carry slates with information on the various issues for sale and meet with clients, much like a broker does today. To learn more about the history of money lending, see The Evolution Of Banking.

Belgium boasted a stock exchange as far back asin Antwerp. Brokers and moneylenders would meet there to deal with business, government and even individual debt issues. It is odd to think of a stock exchange that dealt exclusively in promissory notes and bondsbut in the 's there were no real stocks. There were many flavors of business-financier partnerships that produced income like stocks do, but there was no official share that changed hands.

In the 's, the Dutch, British, and French governments all gave charters to companies with East India in their names.

On the cusp of imperialism's high point, it seems like everyone had a stake in the profits from the East Indies and Asia except the people living there. Sea voyages that brought back goods from the East were extremely risky - on top of Barbary pirates, there were the more common risks of weather and poor navigation.

To lessen the risk of a lost ship ruining their fortunes, ship owners had long been in the practice of seeking investors who would put up money for the voyage - outfitting the ship and crew in return for a percentage of the proceeds if the voyage was successful. These early limited liability companies often lasted for only a single voyage. They were then dissolved, and a new one was created for the next voyage. Investors spread their risk by investing in several different ventures at the same time, thereby playing the odds against all of them ending in disaster.

For more on how this practice plays out today, see: The Importance Of Diversification. When the East India companies formed, they changed the way business was done. These companies had stocks that would pay dividends on all the proceeds from all the voyages the companies undertook, rather than going voyage by voyage.

Stock Market History

These were the first modern joint stock companies. This allowed the companies to demand more for their shares and build larger fleets. The size of the companies, combined with royal charters forbidding competition, meant huge profits for investors. Because the shares in the various East India companies were issued on paper, investors could sell the papers to other investors. Unfortunately, there was no stock exchange in existence, so the investor would have to track down a broker to carry out a trade.

In England, most brokers and investors did their business in the various coffee shops around London. Debt issues and shares for sale were written up and posted on the shops' doors or mailed as a newsletter. The British East India Company had one of the biggest competitive advantages in financial history—a government-backed monopoly. When the investors began to receive huge dividends and sell their shares for fortunes, other investors were hungry for a piece of the action.

The budding financial boom in England came so quickly that were no rules or regulations for the issuing of shares. The South Seas Company SSC emerged with a similar charter from the king and its shares, and the numerous re-issues, sold as soon as they were listed. Before the first ship ever left the harbor, the SSC had used its newfound investor fortune to open posh offices in the best parts of London.

Ticker tape - Wikipedia

Encouraged by the success of the SSC—and realizing that the company hadn't done a thing except for issue shares—other "businessmen" rushed in to offer new shares in their own ventures. Some of these were as ludicrous as reclaiming the sunshine from vegetables or, better yet, america stock td trade company promising investors shares in an undertaking of such vast importance that they couldn't be revealed.

Before we pat ourselves on the back for how far we've come, remember that these money making p2p rs wiki pools still exist today. Inevitably, the bubble burst when the SSC failed to pay any dividends on its meager profits, highlighting the difference between these new share issues billy neighbors stockbroker the British East India Company.

The subsequent crash caused the government to outlaw the issuing of shares—the ban held until stock brokers valley park To learn more, see Crashes: The South Sea Bubble.

The first stock exchange in London was officially formed ina scant 19 years before the New York Stock Exchange. Whereas the London Stock Exchange LSE was handcuffed by the law restricting shares, the New York Stock Exchange has dealt in the trading of stocks, for better or worse, since its javascript function optional input. The NYSE wasn't the first stock exchange in the U.

That honor goes to the Philadelphia Stock Exchangebut it quickly became the most powerful. Formed by brokers under the spreading boughs of a buttonwood treethe New York Stock Exchange made its home on Wall Street. The exchange's location, more than anything else, led to the dominance that the NYSE quickly attained.

It was in the heart of all the business and trade coming to and going from the United States, as well as the domestic base for most banks and large corporations.

By setting listing requirements and demanding fees, the New York Stock Exchange became a very wealthy institution. The NYSE faced very little serious domestic competition for invention of the stock market next two centuries. Its international prestige rose in tandem with the burgeoning American economy, and it was soon the most important stock exchange in the world.

The NYSE had its share of ups and downs during the same period, too. Everything from the Great Depression to the Wall Street bombing of ig markets forex trading platform scars on the exchange - the bombing left 38 dead and also left literal scars on many of Wall Street's prominent buildings.

The less literal scars on the exchange came in the form of stricter listing and reporting requirements. On the international scene, London emerged as the major exchange for Europe, but many companies that were able to list internationally still listed in New York. Many other countries including Germany, France, the Netherlands, Switzerland, South Africa, Hong Kong, Japan, Australia and Canada developed their own stock exchanges, but these were largely seen as proving grounds for domestic companies to inhabit until they were ready to make the leap to the LSE and from there to the big leagues of the NYSE.

Some of these international exchanges are still seen as dangerous territory because of weak listing rules and less rigid government regulation. For related reading, check out Broadening The Borders Of Your Portfolio and Why Country Funds Are So Risky. Despite the existence of stock exchanges in Chicago, Los Angeles, Philadelphia and other major centers, the NYSE was the most powerful stock exchange domestically and internationally. Inhowever, an upstart emerged to challenge the NYSE hegemony.

The Nasdaq was the brainchild of the National Association of Securities Dealers NASD — now called the Financial Industry Regulatory Authority FINRA.

From its inception, it has been a different type of stock exchange. It does not inhabit a physical space, as with 11 Wall Street. Instead, it is a network of computers that execute trades electronically. The introduction of an electronic exchange made trades more efficient and reduced the bid-ask spread — a spread the NYSE wasn't above profiting from.

The competition from Nasdaq has forced the NYSE to evolve, both by listing itself and by merging with Euronext to form the first trans-Atlantic exchange. To learn more, check out The Tale Of Two Exchanges: NYSE And Nasdaq and The Global Electronic Stock Market.

The NYSE is still the largest and, arguably, most powerful stock exchange in the world. The Nasdaq has more companies listed, but the NYSE has a market capitalization that is larger than Tokyo, London and the Nasdaq combined — and the merger with Euronext will make it larger still. The NYSE, once closely tied to the fortunes of failures of the American economy, is now global. Although the other stock exchanges in the world have grown stronger through mergers and the development of their domestic economies, it is difficult to see how any of them will dislodge the pound gorilla that is the New York Stock Exchange.

For more interesting facts about the past years of investing, check out The Stock Market: Dictionary Term Of The Day. A measure of what it costs an investment company to operate a mutual fund. Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam.

Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. The Birth of Stock Exchanges By Andrew Beattie Updated April 24, — 4: Stock exchanges began with countries who sailed east in the s, braving pirates and bad weather to find goods they could trade back home.

We tell you about five of the most popular stock exchanges from around the globe. Check out the history and inner workings of the world's six most well-known stock exchanges.

Here are the answers to all the questions you have about stock exchanges but are too afraid to ask. The New York Stock Exchange has shut its doors multiple times in its long and storied history. The NYSE is known for its prestige so why do some companies opt to list on the NASDAQ instead? Companies don't elect to leave an exchange so much as they're asked. An exchange is an organized marketplace where securities and other financial instruments are traded.

Discover some of the primary advantages and disadvantages that exist for companies listed on the Nasdaq exchange rather than There are three major U. New York Stock Exchange NYSE: NYSE is a stock exchange The Nasdaq and the NYSE are stock exchanges that trade securities.

Nasdaq stands for National Association of Securities Dealers A stock can trade on any exchange on which it is listed.

And to be listed it must meet all of the exchange's listing requirements Learn about the stocks that are traded on the Nasdaq stock exchange, and discover the Nasdaq's relative volatility level An auction market is one in which stock buyers enter competitive bids and stock sellers enter competitive offers at the same An expense ratio is determined through an annual A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.

A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all A legal agreement created by the courts between two parties who did not have a previous obligation to each other.

A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. A statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over No thanks, I prefer not making money.

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