History of Stock exchanges
The history of stock exchanges can be traced to 12th century France, when the first brokers are believed to have developed, trading in debt and government securities. Unofficial share markets existed across Europe through the 1600s, where brokers would meet outside or in coffee houses to make trades. The Amsterdam Stock Exchange, created in 1602, became the first official stock exchange when it began trading shares of the Dutch East India Company. These were the first company shares ever issued.
In 12th century France the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks.
By the early 1700s there were fully operational stock exchanges in France and England, and America followed in the later part of the century. Share exchanges became an important way for companies to raise capital for investment, while also offering investors the opportunity to share in company profits. The early days of the stock exchange experienced many scandals and share crashes, as there was little to no regulation and almost anyone was allowed to participate in the exchange.
Today, stock exchanges operate around the world, and they have become highly regulated institutions. Investors wanting to buy and sell shares must do so through a share broker, who pays to own a seat on the exchange. Companies with shares traded on an exchange are said to be ‘listed’ and they must meet specific criteria, which varies across exchanges. Most stock exchanges began as floor exchanges, where traders made deals face-to-face. The largest stock exchange in the world, the New York Stock Exchange, continues to operate this way, but most of the world’s exchanges have now become fully electronic.
History of the Indian Stock Market – The Origin
One of the oldest stock markets in Asia, the Indian Stock Markets have a 200 years old history.
| 18th Century | East India Company was the dominant institution and by end of the century, busuness in its loan securities gained full momentum |
| 1830’s | Business on corporate stocks and shares in Bank and Cotton presses started in Bombay. Trading list by the end of 1839 got broader |
| 1840’s | Recognition from banks and merchants to about half a dozen brokers |
| 1850’s | Rapid development of commercial enterprise saw brokerage business attracting more people into the business |
| 1860’s | The number of brokers increased to 60 |
| 1860-61 | The American Civil War broke out which caused a stoppage of cotton supply from United States of America; marking the beginning of the “Share Mania” in India |
| 1862-63 | The number of brokers increased to about 200 to 250 |
| 1865 | A disastrous slump began at the end of the American Civil War (as an example, Bank of Bombay Share which had touched Rs. 2850 could only be sold at Rs. 87) |
Pre-Independance Scenario – Establishment of Different Stock Exchanges
| 1874 | With the rapidly developing share trading business, brokers used to gather at a street (now well known as “Dalal Street”) for the purpose of transacting business. |
| 1875 | “The Native Share and Stock Brokers’ Association” (also known as “The Bombay Stock Exchange”) was established in Bombay |
| 1880’s | Development of cotton mills industry and set up of many others |
| 1894 | Establishment of “The Ahmedabad Share and Stock Brokers’ Association” |
| 1880 – 90’s | Sharp increase in share prices of jute industries in 1870’s was followed by a boom in tea stocks and coal |
| 1908 | “The Calcutta Stock Exchange Association” was formed |
| 1920 | Madras witnessed boom and business at “The Madras Stock Exchange” was transacted with 100 brokers. |
| 1923 | When recession followed, number of brokers came down to 3 and the Exchange was closed down |
| 1934 | Establishment of the Lahore Stock Exchange |
| 1936 | Merger of the Lahoe Stock Exchange with the Punjab Stock Exchange |
| 1937 | Re-organisation and set up of the Madras Stock Exchange Limited (Pvt.) Limited led by improvement in stock market activities in South India with establishment of new textile mills and plantation companies |
| 1940 | Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was established |
| 1944 | Establishment of “The Hyderabad Stock Exchange Limited” |
| 1947 | “Delhi Stock and Share Brokers’ Association Limited” and “The Delhi Stocks and Shares Exchange Limited” were established and later on merged into “The Delhi Stock Exchange Association Limited” |
Post Independance Scenario
The depression witnessed after the Independance led to closure of a lot of exchanges in the country. Lahore Estock Exchange was closed down after the partition of India, and later on merged with the Delhi Stock Exchange. Bnagalore Stock Exchange Limited was registered in 1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable state till 1957 when they applied for recognition under Securities Contracts (Regulations) Act, 1956. The Exchanges that were recognized under the Act were:
Many more stock exchanges were established during 1980’s, namely:
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At present, there are twenty one recognized stock exchanges in India which does not include the Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).
Related posts:
- History of Indian Stock Exchange
- Major Stock Exchanges in world
- What are stock exchanges all about ?
- Trading in BSE/NSE starts at 9 AM from 4th January
- Difference between NSE and BSE
Filed Under: Informative
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