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An exchange, bourse (/bʊərs/), trading exchange or trading venue is an organized market where (especially) tradable securities, commodities, foreign exchange, futures, and options contracts are bought and sold.
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Transcription
What is the Stock Exchange and how does it work? The Stock Exchange is nothing more than a giant globally network tend to orginize the market place where every day huge sums of money are moved back and forth. In total over sixty trillion (60,000,000,000, 000) euro a year are traded. More then the vallue of all goods and services of the entire world economy. However it's not appels or second hand toothbrushes that are traded on this marketplace. But predominantly securities. Securities are rights to assets , mostly in the form of checks. A share stands for a share in a company. But why are shares traded at all? Well, first and foremost the value of a share relates to the company behind it. If you think the value of a company in terms of a pizza. The bigger the overal size of the pizza, the bigger every piece is. If for example facebook is able to increase its profits with a new buisness model. The size of the companies pizza will also increase, and as a result so will the value of its shares. This is of course great for the share holders. A share with perhaps use to be thirtyeight euros could now be worth a whole fifty euros. When it's sold this represents a profit of twelve euro per share! But what does facebook gain from this? The company can raise funds by selling the shares and invest or expand it's buisness. Facebook for example has earned sixty million dollars from it's listing on the Stock Exchange. The trading of shares though, is frequently a game of chance. No one can say whay company is going to preform well and what not. If a company has a good reputation, investors will back it. A company with a poor reputation or poor preformance will have dificulty selling its shares. Unlike a normal market witch goods can be touched and taken home. On the Stock Exchange only vurtual products are avalable. They apear in the form of shareprices and tables on monitors. Such shareprices can rise or fall within seconds. Shareholders have therefor have to act quickly in order not to miss an opertunity. Even a simple rumor can result in the demant for a share falling fast regardless of the real value of the company. Of course the oposite is also posible. If a particular large amount of people buy weak shares. Becouse if they see for example great potential behind an idea. There value will rise as a result. In particular young companies can benefit from this. Even if there sales might be falling, they can generate cash by placing there sales. In the best case senario this will result in there idea becomming reality. In the worst case senario. this will result in a speculative bubble with nothing more than hot air. And in a case with bubbles, at somepoint they will burst. The value of Germanies biggest thirthy companies is summarized in what is known as the DAX share index. The DAX shows how well or poor each of this mayor companies and there by the economy as a whole are preforming at the present time. Stock Exchange is in other countries that also have there own intecies. And all of this markets together create a globally networked markedplace. Subtitles by Tiago Scholten. Subtitles by the Amara.org community
History
12th century: Brokers on the Grand Bridge, France
In the twelfth century, foreign exchange dealers in France were responsible for controlling and regulating the debts of agricultural communities on behalf of banks. These were actually the first brokers. They met on the Grand Bridge in Paris, the current Pont au Change. It takes its name from the forex brokers.[citation needed]
13th century: Huis ter Beurze, Belgium
The term bourse[note 1] is related to the 13th-century inn named "Huis ter Beurze" owned by Van der Beurze family in Bruges, Belgium, where traders and foreign merchants from across Europe, especially the Italian Republics of Genoa, Florence and Venice, conducted business in the late medieval period.[2] The building, which was established by Robert van der Beurze as a hostelry, had operated from 1285.[3] Its managers became famous for offering judicious financial advice to the traders and merchants who frequented the building. This service became known as the "Beurze Purse" which is the basis of bourse, meaning an organized place of exchange. Eventually, the building became solely a place for trading in commodities.
During the 18th century, the façade of the Huis ter Beurze was rebuilt with a wide frontage of pilasters. However, in 1947 it was restored to its original medieval appearance.[citation needed]
13th century–17th century: Italian city-states, Belgium and the Netherlands
In the thirteenth century, the Lombard bankers were the first to share state claims in Pisa, Genoa, and Florence. In 1409, the phenomenon was institutionalized by the creation of the Exchange Bruges. It was quickly followed by others, in Flanders and neighboring countries (Ghent and Amsterdam). It is still in Belgium and the first building designed to house a scholarship was built in Antwerp. The first scholarship organized in France was born in Lyon in 1540.[citation needed]
The first documented crash took place in 1636 in Holland.[4] The prices of tulip bulbs reaching excessively high levels, known as the Tulip mania. The price collapsed on October 1.
In the seventeenth century, the Dutch were the first to use the stock market to finance companies.[5] The first company to issue stocks and bonds was the Dutch East India Company, introduced in 1602.
17th century: England and France
The London Stock Exchange started operating and listing shares and bonds in 1688.[6]
The Paris Stock Exchange was founded in 1724.[7] In 1774, the courts required that it be shouted[clarification needed] to improve the transparency of operations.[citation needed]
Contemporary history
In the nineteenth century, the industrial revolution enabled rapid development of stock markets, driven by the significant capital requirements for the finance industry and transport. Since the computer revolution of the 1970s, there has been a dematerialization of securities traded on the stock exchange.[citation needed]
In 1971, the NASDAQ became the primary market quotes computer[clarify]. In France, the dematerialization was effective from November 5, 1984.[citation needed]
The development of information technology during the late part of the 20th century led to a new type of electronic exchange that replaced the more traditional physical markets. This led to new definitions in financial regulations that recognized these new exchanges, such as the multilateral trading facility in Europe and alternative trading system in the United States. Regulators also started using the term trading venue to describe the wider definition which encompasses both traditional exchanges and electronic exchanges.
Description
Exchanges bring together brokers and dealers who buy and sell these objects. These various financial instruments can typically be sold either through the exchange, typically with the benefit of a clearing house to reduce settlement risk.
Exchanges can be subdivided:
- By objects sold:
- Stock exchange or securities exchange[8]
- Commodities exchange
- Foreign exchange market – is rare today in the form of a specialized institution
- By type of trade:
- Classical exchange – for spot trades
- Futures exchange or futures and options exchange – for derivatives
In practice, futures exchanges are usually commodity exchanges, i.e., all derivatives, including financial derivatives, are usually traded at commodity exchanges. This has historical reasons: the first exchanges were stock exchanges. In the 19th century, exchanges were opened to trade forward contracts on commodities. Exchange-traded forward contracts are called futures contracts. These "commodity exchanges" later started offering future contracts on other products, such as interest rates and shares, as well as options contracts; now they are generally known as futures exchanges.
For details, see:
- Stock exchange (securities exchange), List of stock exchanges, Category:Stock exchanges
- Commodity exchange (futures exchange), List of futures exchanges, Category:Futures exchanges
- Foreign exchange market
See also
- Commodity market
- Private electronic market
- Stock market
- List of stock exchanges
- Over-the-counter (finance)
Notes and citations
- Notes
- ^ The term bourse is derived from (Ancient Greek: βύρσα, romanized: bursa, lit. '"the skin stripped off a hide"') which was later used as bursa in Medieval Latin to refer to the "purse".
- Citations
- ^ "Word of the Day / Bursa: You Can Invest in This Word". Haaretz.
- ^ Bourse. Online Etymology Dictionary
- ^ "The stock market: from the 'Ter Beurse' inn to Wall Street". nbbmuseum.be. Archived from the original on 2019-08-12. Retrieved 2018-04-09.
- ^ Kindleberger, Charles P. and Aliber, Robert (2005). Manias, Panics, and Crashes. A History of Financial Crises. New York. p. 16. ISBN 0-465-04380-1.
{{cite book}}: CS1 maint: location missing publisher (link) CS1 maint: multiple names: authors list (link) - ^ Crump, Thomas (1 March 2006). "The Dutch East Indies Company – The First 100 Years [Transcript]". Gresham College (Gresham.ac.uk). Retrieved 21 August 2017.
- ^ Ban, Zoltan (2011-12-30). Sustainable Trade: Changing the Environment the Market Operates In, Through Standardized Global Trade Tariffs. Author House. ISBN 978-1-4685-0594-8.
- ^ White, Eugene N. (2003), Rosenthal, Jean-Laurent; Sokoloff, Kenneth L.; Hoffman, Philip T.; Engerman, Stanley L. (eds.), "The Paris Bourse, 1724–1814: Experiments in Microstructure", Finance, Intermediaries, and Economic Development, Cambridge: Cambridge University Press, pp. 34–74, doi:10.1017/cbo9780511510892.004, ISBN 978-0-521-82054-7, retrieved 2022-10-28
- ^ Stock Exchanges are the most publicly recognized places for buying and selling shares. They are easily the single most important component of the secondary market for corporate shares. Over-the-Counter Options Archived 2010-05-10 at archive.today. About.com.
References
- Etzel, Barbara (Aug 29, 2003). Webster's New World Finance and Investment Dictionary. Wiley. ISBN 978-0764526350.
- "FAZ.NET Börsenlexikon". Frankfurter Allgemeine Zeitung (in German).
- "Commodity exchange". Encyclopaedia Britannica.
External links
- . Collier's New Encyclopedia. 1921.
This page was last edited on 1 April 2024, at 18:30