The World’s Top 5 Stock Exchanges
The world’s top five largest stock exchanges in terms of market capitalization are New York, the NASDAQ Stock Exchange, Tokyo, London and Shanghai. This is a brief introduction to each of these.
New York Stock Exchange
With a market capitalization of its listed companies at $13.39 trillion at the end of 2010, the New York Stock Exchange is the world’s biggest. The average trading value is over $150 billion a day. The New York Stock Exchange is located in the world famous Wall Street in Lower Manhattan and has been operated by NYSE Euronext since 2007 when there was a merger with the fully electronic stock exchange, Euronext. A stock exchange in New York goes back to 1792 when the so-called Buttonwood Agreement was signed by twenty-four stock brokers outside of 68 Wall Street under a Buttonwood Tree. This became the New York Stock and Exchange Board in 1817 and changed to its current name in 1863.
NASDAQ Stock Exchange
The NASDAQ is also based in New York. It was founded in 1871 by the National Associates of Securities Dealers. It was the world’s first electronic stock exchange and used a computer bulletin board system, but did not initially connect buyers and sellers. It helped lower the difference between the bid prices and asking prices of stock. It was eventually a successor to the OCT (over the counter) system. In the late twentieth century the NASDAQ added trade and volume reporting and automated trading systems and later became the first US stock market to trade online.
Tokyo Stock Exchange
The Tokyo Stock Exchange has over 2,000 listed companies with a combined market capitalization of almost $4 billion, the most in Asia. It was originally established in 1878. In 1943 it combined with ten other stock exchanges throughout Japan to form a single Japanese stock exchange. This was, though, soon impacted by World War II, when it was shut down. It was re-established in May 1949. The stock exchange grew massively during the 1980’s, and in 1990 accounted for 60% of the world’s stock market capitalization. However, it then crashed. It has recovered since, but is not as large as it once was.
London Stock Exchange
The trading of shares in London began due to two voyages, one to China and one to India, needing to be financed. This was in the 1680’s and proved a big success. Shares were sold to merchants in exchange for a share of any future profits. A trend had begun and other types of organisations and businesses followed suit. In 1697 it became necessary for all traders to be licensed. This idea was introduced because there had been several problems arising from insider trading. For a long time non-British citizens could not become member of the London Stock Exchange, with this eventually changed as late as the 1970’s. In 2005 and 2006 there were takeover bids from the Macquarie Bank and the NASDAQ Stock Exchange, though both were rejected. There is though, a 28% stake owned by The Borse Dubai stock exchange.
Shanghai Stock Exchange
The market for Securities trading began in Shanghai in the late 1860’s when several banks were established. In the 1890’s there was a boom in mining shares and foreign businessmen founded the Shanghai Sharebrokers Association headquarters in the City. In the early years it mostly consisted of the exchange of securities of local companies. In the 1920’s the Shanghai Securities and Commodities and the Shanghai Chinese Merchant Exchange operated separately, but were merged in 1929. This officially became the Shanghai Stock Exchange. With Shanghai occupied by the Japanese Army in 1941, the stock exchange was closed down. This was re-opened in 1946 but closed again after the Communist Revolution in 1949. A stock market was opened again in 1978, with the Shanghai Stock Exchange re-established in 1990. It has seen steady growth since and is now the fifth biggest stock exchange, and continuing to grow along with the Chinese economy.
Andrew Marshall ©
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