Stock Exchanges

Stock exchanges form an important part of stock trading, as for stocks to be traded they have to be listed with the stock exchanges. The history of stock exchanges dates back to the 11th century when the courtiers de change in France regulated and looked after the transactions in the agricultural community. The world's first exchange was in set up in Antwerp, Belgium in 1460. Today, the stock exchanges have come a long way with large exchanges across the world, for example, The Bombay Stock Exchange (BSE) in India and the New York Stock Exchange (NYSE) in the United States. Some of these are physical exchanges, where trading happens on the floor, while some are electronic exchanges, where trading happens over electronic media.

Companies across the world have to fulfill certain criteria in order to be listed and their stocks to be traded on any stock exchange. These criteria comprise the minimum number of shares, minimum market capitalization, and minimum annual revenue generated by a company. Commonly, a company's stocks are listed only in one exchange; however, big corporations may get themselves on the list of more than one exchange. Besides trading, various kinds of stock trading information are also available to public through exchanges. The time for which activities take place in an exchange is known as its trading hours. No stock can be traded or trading information obtained after the trading hours are over for an exchange.

Stock exchanges play a very important role in shaping the economy of any country. Foremost, it is a mirror of a country's financial conditions. When the economy is thriving, there is a flurry of activities in the stock exchange. When it is not, the stock exchange may show a condition that is known as financial "depression." The ownership of huge companies lies within the reach of its big shareholders. But shares floated by companies in stock exchanges, through their initial public offerings, help a common man or a very small investor to own a part (though may be small) of a large company. This entitles him/her to the share of the profit incurred by these companies. On one hand, it helps companies to gather capital to expand their businesses and on the other, these small investors are made a part of this success. This may also help in the redistribution of wealth from the richer section of the society to the common man.

Not only shares, but bonds and unit trusts are also traded on exchanges. These provide very good investment options to people who want to save and invest. While they reap the benefits out of these investments, the cash invested can be made "liquid" and used for financial transactions taking place in the economy. Simply put, the government may borrow money from the public through the selling of bonds and utilize this money for some developmental activity. As there are numerous benefits that can be associated with stock exchanges, speculative trading can sometimes lead to the instability of the stock market.

The number of stock exchanges around the world is rapidly increasing. Although physical exchanges exist, the future of exchanges may lie in the electronic exchanges. Stock exchanges comprise an important part of the economy and will continue to be so with increasing number of people trusting to invest their money in stock trading.

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