Stock exchanges and the history of their appearance

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Stock exchanges are a form of exchange that provides trading services for stocks, bonds and other securities. They also provide conditions for the placement and redemption of equity securities and other financial instruments, even the payment of income and dividends.

Any exchange must be registered in the required order. Previously, they were located mainly in the centers of large cities, but today trade is becoming less and less associated with a physical place. This is due to the fact that numerous modern markets for electronic networks have emerged, with the advantages of high speed and reduced transaction costs. In order for the activities of the stock exchange to be available, you must become a member.

It took centuries for the stock market to develop to its present state. The idea of borrowing money goes back to the ancient world, as evidenced by Mesopotamian clay tablets with records of interest-bearing loans. Scholars are divided today as to when corporate stock trading first began. Some consider the founding of the Dutch East India Company in 1602 to be the key event, while others point to moreearly events.

Thus, in the Roman Republic, which existed for centuries before the proclamation of the empire, there was a societates publicanorum - an organization of contractors or tenants who built temples and provided other services for the government. One such service was the feeding of geese on the Capitoline Hill (as a reward, since the birds warned the Romans about the Gallic invasion in 390 BC with their sounds). Members of such organizations had shares, the essence of which was explained by the statesman and orator Cicero. Such "stock exchanges" (or rather, their ancient prototypes) disappeared during the reign of the emperor, since most of the assets were transferred to the state.

Bond trading first appeared in Italian cities in the late Middle Ages and early Renaissance. In 1171, the authorities of the Republic of Venice, concerned about the impoverished treasury, began to practice forced loans from citizens. These payments, known as Prestiti, had an indefinite repayment period and promised compensation of 5 percent of the amount per year. Initially, they seemed suspicious, but subsequently came to be seen as valuable investments that can be bought and sold. The bond market began to rise.

As with the latter, stock exchanges developed gradually. Partnership agreements relating to the division of property by shares were mentioned quite often already in the 13th century, againpredominantly in Italy. However, such agreements usually covered only a small group of people and were concluded for a limited period, for example, for one sea voyage.

These commercial innovations eventually crossed over from Italy to Northern Europe. By the end of the 16th century, English merchants were already cooperating with joint-stock companies, designed to operate on a permanent basis. In the 18th century, stock exchanges were practically no different from today.

The main merit of these organizations is that they do not require huge capital expenditures to invest in shares. This gives the same opportunity to invest money to both large and small investors - a person buys as many shares as he can afford. In addition, today there are many varieties of these enterprises - currency and stock exchange, futures, etc.