Stock Market

History of stock
th
market from 16 to
st
21 Century
• Starting of Stock trading in early 1200s, century
• World 1st stock market & Stock Exchange
Company
• Some glimpse from the past
• History & Introduction of Indian Stock Market
• Purpose “Why stock market is essential for a
economy”
 • The Early 12th
Stock century,
• The Dutch East
market India Company
• Oldest Stock
in its Certificate issued
early by the VOC
• World 1st Stock
ages Exchange
• World 1st book on
Stock Market
Early History from ‘12th-15th Century’
• In 12th-century France, the courretiers de change were concerned with managing &
regulating the debts of agricultural communities on behalf of the banks. Because these men
also traded with debts, they could be called the 1st brokers.
• A common misbelief is that, in late 13th century Bruges, commodity traders gathered inside
the house of a man called ‘Van der Beurze’, & in 1449 they became the “Brugse Beurse”, In
Antwerp, Belgium, the family Van der Beurze had a building where most of the merchants of
that time gathered for trading.
• That idea quickly spread around Flanders & neighboring countries & “Beurzen” soon opened
in Ghent & Rotterdam. Later on, the Merchants of Venice were credited with trading govt.
securities as early as the 14th century. Soon after, bankers in the nearby cities of Pisa,
Verona, Genoa & Florence also began trading govt. securities.
• This was only possible because these were independent city-states ruled by a council of
influential citizens.
• Italian companies were also the 1st to issue shares.Companies in England & the low
countries followed in the 16th century.
The Dutch East India Company/United
East Indies Company
• In 1602, it was originally established as a chartered company to trade with
India & South East Asia.
• It was an early multinational company in its modern sense.
• Dutch govt. granted it a 21 year monopoly on the spice trade.
• In the early 1600s, by widely issuing bonds & shares of stock to the general
public it became world’s 1st formally listed public company.
• It was 1st corporation to be ever actually listed on an official stock exchange.
• The Amsterdam stock exchange was the 1st official stock exchange in the
world launched by VOC in 1611.
• Amsterdam based businessman “Joseph De La Vega’s” ‘Confusion de
Consfusiones (1688) was the earliest known book about stock trading & on
the inner workings of the stock market.
World’s
One of the
oldest
known
stock
certificates,
issued by
the VOC,
on 9 Sep
th

1606
Courtyard of
the Amsterdam
Stock Exchange
(Beurs van
Hendrick de
Keyser in
Dutch), the
foremost center
of global
securities
markets in 17th
century.
A 400-year
evolution of
global stock
market,
The process of
buying & selling
the VOC’s shares,
on the
Amsterdam
stock exchange,
became the basis
of the world’s
first official stock
market.
 World 1 st modern stock exchange
• London Stock Exchange was founded on 23rd January 1571, it was founded by
Thomas Gresham on the model of Antwerp Bourse, at the time of Elizabeth
first.
• It was officially formed in 1801.
• NYSE-New York Stock Exchange in 1817, became the most powerful stock
exchange in the country due to the lack of any type of domestic competition &
its positioning at the center of U.S. trade & economics.
• The LSE was the main stock exchange for Europe(Before Brexit), while NYSE is
the main stock exchange for America & the world.
• Now as we know there are stock market in every developed & developing
countries with world’s largest stock market in US, UK, Japan, China, India,
Canada, Germany & France etc.
The Indian stock market “BSE”
• East India Company used to transact loan & securities by the end of 18th century. In
1830s, trading on corporate stocks & shares in bank & Cotton presses took place in
Bombay.
• Few informal groups of Stock Brokers organized themselves, On 8th July, 1875 they
were formally organized “Bombay Stock Exchange” at Dalal Street, Bombay, as the
1st stock exchange in the country.
• It was founded by ‘Mr. Premchand Roychand’ who was an influential businessman
at that time. He was also known as Cotton King, Bullion king etc.
• On 31st August,1957, the BSE became the 1st stock exchange to be recognized by the
Indian Govt. under the Securities Contracts Regulation Act.
• BSE was considered as first & oldest stock exchange of Asia.
• Historically an open outcry floor trading exchange, BSE switched to an electronic
trading system developed by CMC Ltd. In 1995.
• Now the BSE is the world’s 10th largest stock exchange with an overall market
capitalization of more than $2.3 trillion as of April 2018.
 NSE-National Stock Exchange
• In April 1992, BSE crashed due to Harshad Mehta Scam. Finance Minister Mr.
Manmohan Singh urged the need of other stock exchange in competition to
BSE. He tapped the IDB to take the lead of the project.
• In November 1992, NSE was established as the 1st electronic traded stock
exchange in India, after a few years of operation it become the largest stock
exchange of India.
• It is also located at Mumbai, it was the 1st exchange in India to provide a
modern, fully automated screen based electronic trading system.
• NSE has a total market capitalization of more than $2.27 trillion, making it the
world 11th largest stock exchange as of April 2018.
Purpose of stock market
• History has shown that the price of stocks & other assets is an important part of
the dynamic economic activity.
• An economy where the stock market is on the rise is considered to be an up-
and coming economy.
• The stock market is often considered the primary indicator of a country’s
economic strength & development.
• Rising share prices, for instance, tend to be associated with increased business
investment & vice versa.
• Share price also affect the wealth of household & their consumption therefore,
Central Banks tend to keep an eye on the control & behavior of the stock
market & in general on the smooth operation of financial system functions.
Thank You!
M.A. Previous Year