Stock exchanges have become an integral part of a country's economy. These are mainly known to help companies raise large pools of capital for their expansion by selling shares to the public interested in investing.
These exchanges were started as central locations where buyers and sellers take part in the 'continuous auction' of company stocks via open outcry on the floor of the exchange. Open outcry is a method of communication used by professional traders at a stock exchange, which involves shouting and using hand signals to convey information on buy or sell orders. They would gather at a part of the trading floor known as the 'pit.'
This method was used back in the 17th century, when the first stock exchange came into being. In the late twentieth century, the method changed to telephone trading and by 1980s, exchanges moved to electronic trading systems.
In the 2000s, a few exchanges were still using the outcry method, however, most moved to the electronic trading platform as they were faster, cost effective and less prone to manipulation by brokers/dealers.
Here is a list of the 10 oldest stock exchanges in the world to give you an idea of how it all started.
10. Bombay Stock Exchange (1875)
The Bombay Stock Exchange (BSE) was established on the Dalal Streeet in Mumbai on 9 July 1875, to become Asia's first stock exchange.
It was founded by Premchand Roychand, one of Mumbai's influential businessmen back in the 19th century.
Back in the 1850s, the venue of for the earliest stock exchange brokers meetings was just under the banyan trees in front of Town Hall.
The brokers kept changing location of their meeting points, until 1874, when with an increase in their numbers called a need for a permanent location and the Dalal Street was chosen.
A decade after India's independence, that is on 31 August 1957, BSE was recognised as a stock exchange by the Indian Government under the Securities Contracts Regulation Act. In 1986, BSE's SENSEX index was developed.
Today, it is the world's tenth largest stock exchange in terms of market capitalization of the issued shares of listed companies.
9. Toronto Stock Exchange (1852)
Toronto Stock Exchange (TSX), the ninth largest stock exchange today, is a wholly owned subsidiary of TMX Group.
It is said that the exchange may have descended from the Association of Brokers, a group of Toronto businessmen that was formed in 1852.
While no records of their transactions were maintained, it is believed that 24 of these brokers came together on 25 October 1861 to form TSX.
In 1878, the exchange was incorporated by an act of the Legislative Assembly of Ontario.
8. Madrid Stock Exchange (1831)
Madrid Stock Exchange (known as Bolsa de Madrid in Spanish) is the largest of Spain's four stock exchanges and is owned by Bolsas y Mercados Españoles.
It was founded in 1831 and is housed in the a historic nineteenth-century building, the Palacio de la Bolsa de Madrid.
In accordance with the Spanish law, it is managed and operated by the Sociedad Rectora de la Bolsa de Valores de Madrid S.A., a corporation organized under the laws of the Kingdom of Spain.
In 1993, the exchange switched to all-electronic trading for fixed-income securities.
7. Frankfurt Stock Exchange (1820)
The Frankfurt Stock Exchange (Die Frankfurter Wertpapierbörse - FWB in German), which is owned and operated by Deutsche Börse AG and Börse Frankfurt Zertifikate AG is known to be formed in 1820.
According to Deutsche Börse AG's website, the FWB's origin can be traced to the 11th century when the city of Frankfurt gained importance for commercial and monetary transactions, after merchants decided to meet to establish a uniform exchange rate, in the absence of a single currency neither in Europe or Germany.
The exchange then initiated trading in promissory notes and bonds, and continued to be privately operated by merchants till the 17th century. In 1808, the exchange was brought under the Chamber of Commerce and trading of government bonds began by the end of the 18th century.
In contrast to the other large European stock exchanges, the Frankfurt market remained focused on bonds, until 1820, when the first common share (a participating certificate of the Austrian National Bank) was traded at the FWB.
Today, it is the twelfth largest stock exchange in the world in terms of market capitalization.
6. New York Stock Exchange (1817)
NYSE is the largest stock exchange in the world located at the Wall Street, New York City. Though the exchange has some of the biggest American corporations listed on it, it faces stiff competition from another New York-based stock exchange, NASDAQ.
Nasdaq is the second largest stock exchange in the world and is known for listing the biggest tech companies, including Apple, Amazon and Microsoft.
NYSE's beginnings date back to 1792, when 24 brokers signed the Buttonwood Agreement, which set a floor commission rate charged to clients. In 1817, they re-formed as the New York Stock and Exchange Board, a broker organization that would rent out space for securities trading.
After moving between several locations, in 1865, the present location was adopted. NYSE has been trading in stocks since the first day of its formation in 1817.
5. Borsa Italiana, Milan (1808)
Borsa Italiana S.p.A. is based in Milan and is Italy's only stock exchange. Since 2007, it has become a subsidiary of the London Stock Exchange.
Earlier known as the Borsa di commercio di Milano (Milan Stock Exchange), it was established by Eugène de Beauharnais, viceroy of the Napoleonic Kingdom of Italy, through decrees dated 16 January and 6 February 1808 and operated under public ownership until 1998, when it was privatized.
The exchange is also known for its controversial giant marble middle finger statue. Just like the iconic Charging Bull in Wall Street, New York City, a 36-foot white sculpture of a hand without fingers, except for the middle one, become a part of the Business Square (Piazza Affari) in the city of Milan in 2010.
The statue bearing the title L.O.V.E. for Libertà, Odio, Vendetta, Eternità (Freedom, Hate, Vengeance, Eternity in Italian) was created and donated by Italy's famous contemporary artist Maurizio Cattelan (known for his satirical sculptures) in 2010.
It was supposed to stay in Piazza Affari for just a couple of weeks, but the city government decided to keep it there indefinitely.
4. London Stock Exchange (1801)
The London Stock Exchange (LSE) was founded in Sweeting's Alley in London in 1801. However, companies were allowed to issue shares only in 1825, hurting its growth in the initial period.
The exchange was the largest stock exchange in the world, until the end of World War I. It now stands at seventh position on the world-wide ranking in terms of market capitalization.
3. Philadelphia Stock Exchange (1790)
Philadelphia Stock Exchange (PHLX) is the oldest stock exchange in the United States. It was founded in 1790 as "Board of Brokers of Philadelphia."
Over the following 200 years, it changed its title and location several times.
On 7 November, 2007, NASDAQ announced its agreement to purchase PHLX for $652 million. The acquisition was completed on 24 July 2008, after which the exchange has been known as NASDAQ OMX PHLX.
It makes up for over 26 percent of market share in exchange-listed stock and ETF options trading in the US.
2. Paris Bourse (1724)
Paris Bourse (Paris Stock Exchange) was formed in 1724 in Paris, France. In 2000, stock exchanges of Paris, Amsterdam, Lisbon and Brussels were merged to form a larger exchange to serve the harmonised financial markets in the European Union region, called the Euronext NV.
Euronext NV is now the second largest European stock exchange after LSE.
Paris Bourse was renamed as Euronext Paris after the merger.
1. Amsterdam Stock Exchange (1602)
Known as Euronext Amsterdam after the merger to form Euronext NV, it was established as Amsterdam Stock Exchange in 1602 by the Dutch East India Company for dealings in its printed stocks and bonds. It was renamed 'Amsterdam Bourse' and became the first exchange ever to formally trade securities.
Historians say that the Amsterdam Bourse cannot rightly be called the first stock exchange or market as state loan stocks had been negotiated in Venice, Florence and Genoa, all Italian cites before 1328.
However, it could be considered the oldest "modern" securities exchange market as it was close to the first securities market setup that we call as a stock exchange today.
Shortly after its establishment in 1602, equities were traded on a regular basis as a secondary market for shares.
The Euronext NV has its registered office in Amsterdam but operates out of Brussels, London, Lisbon, Dublin, and Paris as well.