Stock Exchange is the place, where exactly you do your business. Your stock trading transactions are executed at the stock exchanges through your broker, unless you have a membership with that exchange, which enable you to trade directly.
Even though you are not directly connected with them, you should know about your share market and keep revisiting to its website. They are owned by either a group of member stock brokers, or by public with listed shares, or by government or semi government bodies. In any case they are all controlled and scrutinized by authorized bodies.
The securities traded on an exchange includes shares and its derivatives like futures, options, index futures, ETFs, unit trusts, pooled investment products and bonds. With the advent of internet, exchanges have become more efficient with speed and accuracy, and cost effective. The brokerage which was once around 2 to 3 percent, has come down to 0.1 to 0.5 percent.
Shares are issued by the respective companies and is called as primary stock market. They are subsequently traded at the exchange, which is called secondary stock market. Companies should meet the listing requirements to be listed or traded in any exchange. Both primary and secondary markets need not involve an exchange. Trades not involving an exchange are called “off exchange or over the counter (OTC) trades”.
The world’s first exchange was established in Antwerp, Belgium in 1460 under the rule of Philip the Good. The Antwerp exchange traded financial securities, primarily bonds.
The Amsterdam Stock Exchange is considered the oldest in the world. It was established in 1602 by the Dutch East India Company. It was subsequently renamed the Amsterdam Bourse and was the first to formally begin trading in securities. It merged on 22 September 2000 with the Stock Exchange of Brussels and Paris to form Euronext, and is now known as Euronext Amsterdam.
The Bombay Stock Exchange Limited or BSE is the oldest stock exchange in Asia and has the greatest number of listed companies in the world, with 4700 listed as of August 2007.
The New York Stock Exchange (NYSE) is the world’s largest stock exchange by market capitalization.
List of top 15 exchanges with highest market capitalization.
- New York Stock Exchange, United States, US$ 11,837 billion
- Tokyo Stock Exchange, Japan, US$ 3,306 billion
- NASDAQ, United States, US$ 3,239 billion
- Euronext, Belgium, France, Holland, Portuga, US$ l2,869 billion
- London Stock Exchange, United Kingdom, US$ 2,796 billion
- Shanghai Stock Exchange, China, US$ 2,704 billion
- Hong Kong Stock Exchange, Hong Kong, US$ 2,305 billion
- Toronto Stock Exchange, Canada, US$ 1,608 billion
- BM&F Bovespa, Brazil, US$ 1,337 billion
- Bombay Stock Exchange, India, US$ 1,306 billion
- BME Spanish Exchanges, Spain, US$ 1,297 billion
- Frankfurt Stock Exchange, Germany, US$ 1,292 billion
- Australian Securities Exchange, Australia, US$ 1,261 billion
- National Stock Exchange of India, India, US$ 1,224 billion
- SWX Swiss Exchange, Switzerland, US$ 1,064 billion
Stock exchanges apart from being hub of primary and secondary market, they have very important role to play in the economy of the country.
The World Federation of Exchanges or WFE are the trade association of 52 publicly regulated stock, futures and options exchanges. Their market operators are responsible for the functioning of key components in the financial world.