Origin of stock market
Hello, guys, we all know about the stock market around the world. In India, we have BSE and NSE as a major stock exchange. But when did the stock market came into practice, which was the first company to trade their stocks? One of the most important factors for economic growth is the stock market. To know how to invest in the stock market use this link.
What is the Stock market?
When we talk about the stock market we talk about NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) in India. Companies get listed under either NSE or BSE or both. Most of the large companies are listed under NSE and BSE so it can be difficult to buy a stock of a particular company. These companies list out stocks in the form of shares or bonds, to increase the capital of their business. The trading of these stocks in the market is the Stock market.
History of the Stock Market
AS early as 1531, Belgium boasted stock exchange in Antwerp. Brokers and moneylenders would meet to deal with the business, government and individual debt issues. Back in the 1500’s the stock would be dealt in promissory note nad bonds, because there were no real stocks.
The first company to publicly trade their shares on the Amsterdam stock exchange was East India company in 1602. All the investors who invested in these stocks were entitled to a fixed percentage of profits.
The East India company would send ships to east, that would bring back valuable goods which would yield them lots of profits. But the risk was very high because of pirates, bad weather and poor navigation. Most of the times they would lose the goods on the way itself. To reduce the risk the company started finding investors, who would invest for their cost of the voyage. The investors will get a share of the profits if the ship returned.
For increasing the success rate the investors would invest in multiple ships excepting larger profits, which would reduce the risk and hoping at least one ship would return.
Dutch East India Company
Dutch East India Company started with a new concept. Instead of investing on a ship-by-ship basis, they floated stocks of their company. By doing this the company had lots of extra cash which helped them to invest in more expedition. By doing more expedition they collected more goods from the colonies which made them more profits.
As the value of these shares increased the investor can hold on and earn dividends or sell the stocks to other investors in profits. It was not a part of the official organisation, so the stock market was created.
London Stock exchange was the first in 1773. New York Stock exchange started in 1791. Though NYSE was not the first in US, it was Philadelphia Stock Exchange.
The two largest and most prominent stock exchanges in India are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). While the BSE has the distinction of being the oldest stock exchange in Asia, established in 1875, the NSE has quickly grown to prominence since its creation in 1992.
