#history of stock market #stock market # share market #why stock market 

Stock Market is a Marketplace where we can buy and sell the shares of publicly listed companies. Stock Market is used to raise capital for expansion and sharing risk with a large number of people. So that one person doesn’t have to bear all risk. 

But Where did it Begin? To understand why and when the stock market was introduced to the world. Firstly we need to understand the History, its emergence and evolution of the stock market.  So let’s Begin with!!!!

The Birth(History) of Stock Market

The Beginning – Bruges, Belgium(15th Century)

The very first place that resembles the stock market was Bruges,Belgium in the 15th Century. Traders meet at the house of the Wealthiest Family Named “Van de Brouse” . A place where financial transactions like buy and sell commodities, debt and other financial instruments take place. “Bourse” , the term used for European stock exchanges, came to represent any place where transactions took place.The Early Market was not the same as it is nowadays.

Birth of Joint Stock Companies

Joint Stock Companies is an entity in which shares of the company can be bought and sold. In the 16th Century when Europeans explored to Discover  new trade routes and territory to expand their business. To fund these types of risk involved business they formed Joint Stock Companies. They allow multiple investors to pool their money in exchange of confirmed profit.

The British East India Company was Founded in 1600,whereas the Dutch East India Company was Founded in 1602.

The First Stock Market was introduced in Amsterdam 1602, with the establishment of the VOC (Vereenigde Oostindische Compagnie of ) i.e Dutch East India Company.

It was the first company that allowed anyone to invest and have a share in profits. VOC issued bonds and shares, becoming the first company to list on a stock exchange. This led to the formation of the Amsterdam Stock Exchange, the world’s first stock exchange where people bought and sold shares under regulated guidelines.

The world introduced the stock market to spread risk among a large group of investors and facilitate capital raising for businesses.

1. Raising Capital for Large Ventures

Primary reason for the creation of the stock market was to raise capital for large ventures. In case of Dutch East India Company they pool their capital to expand their business. To finance expensive and risky trade to explore Asia.

2. Risk Distribution

Before the stock market, wealthy families or individuals funded businesses and bore all the risk if the venture failed. To spread the risk to larger group of investors and reduce the burden on individuals, the stock market was introduced.

3. Market Efficiency and Liquidity

The stock market created a centralized market, allowing securities to trade easily and enabling customers to quickly encash their investments.

4. Price Discovery and Transparency 

Stock Market Provides the Fair Value of Stocks by method of Supply and Demand. By this, investors have confidence of Fair value of stocks.

5. Economic Growth and Wealth Creation

 Stock Market Provides the Economic growth to country and individual by raising large amounts of money from stock market and contribute in expansion and growth of the Country. Companies could make investments in resources, Infrastructure and new  technology to promote their Business Globally and expand industrial development.

Expansion and Evolution of Stock Market (17th to 19th Century)

After establishing the Amsterdam Stock Exchange, the concept of the stock market spread across Europe and to other countries.

1. LSE( London Stock Exchange)

In 1698, John Castaing, a broker, began listing stock prices at Jonathan’s Coffee House in London, marking start of London Stock Exchange. Soon, informal listing became the central hub for stock brokers, leading to the formation of a formal exchange. In 1801, they officially founded the London Stock Exchange, providing a more structured and regulated marketplace. After that LSE played a crucial role to raise money for the  industrial as well as Expansion of the British Empire.

2. The New York Stock Exchange(1792)

After the exploration of Europe Stock Market , USA also developed there interest in 1792,a Group of 24 Stockbrokers signed the BUTTONWOOD Agreement under a BUTTONWOOD tree on wall street in New York city.This Agreement place the foundation of NYSE,Later become the world’s largest stock market. 

NYSE, formerly formed in 1817,initially traded shares of government bonds and a few companies, and saw Rapid Growth due to Industrialization and westward expansion.

3.  Paris Bourse (1801)

 The Paris Bourse became the principal stock market of France in 1801. In order to finance infrastructure projects and industrial businesses, the Paris Bourse was essential In helping to modernize the French economy. The Paris Bourse, like its equivalents in London and Amsterdam, contributed to the creation of a regulated market for trading of shares and other securities.

4. Tokyo Stock Exchange (1878)

In 1878, Japan inaugurated the Tokyo Stock Exchange (TSE) during the Meiji Restoration, a time of fast industrialization and development. The TSE sought to offer a regulated market for the exchange of newly established industrial enterprises and  shares. Soon It became a representation of Japan’s  modernization and growth of its economy. They enable businesses to raise money and encourage investment.

5. Other Global Markets(19-20 Century)

Stock exchanges founded in several Countries of the world during the 19th  and the early 20th century. Like in Italy ,Australia, China, and India. “Stock markets are developed to meet specific needs of local markets. Helping businesses raise capital and contributing to economic development of country.”

The Conclusion

The world was first exposed to the stock market in response to the increasing demands of economic expansion, risk management, and capital. With its beginnings in Bruges the 15th century to formation of Amsterdam Stock Exchange in 1602. The stock market gradually expanded to London, New York, and other places. Stock Market involved into  global financial system that allowed wealth creation, economic growth, and innovation to  the world. Today, stock markets are the heart of the world economy. Stock Market allow capital  raising, encouraging  business  to raise capital and provide investors with new opportunities.  As  the Financial  system of  world  introduce new  technology and advancements. The Stock Market becomes a cornerstone of economic growth and development of the World.