How Did Stock Markets Start

People around the world have been trading for hundreds of years. Before a monetary system, traders exchanged and bartered for furs, spices, gold and other goods. The concept of trading was a not a new one, so it was only a matter of time before an official trading market was implemented.

The first stock market

The first official stock market, the Amsterdam Stock Exchange, was opened in 1602. Trading began when the exchange began trading shares of the Dutch East India Company.

Other stock exchanges soon opened in Europe as companies realized the exchange was a way to raise money to expand their businesses. The London Stock Exchange was established in 1698 by John Castaing and remains strong today.

America's stock exchanges

The first stock exchange to open in the United States was the New York Stock Exchange (NYSE). In 1792, stockbrokers gathered outside on Wall Street, under a buttonwood tree, to set rules for buying and selling bonds and company shares. The rules set forth came to be known as the Buttonwood Agreement because the buttonwood tree was a regular meeting place for the founders of the exchange. Although originally titled the New York Stock and Exchange Board, the exchange was given its current name in 1863.

Around the same time (1790), the Philadelphia Stock Exchange also opened its doors. Over the next 200 years, the exchange would be known by different names throughout the city until it was purchased by NASDAQ in 2007.

The American Stock Exchange (also known as Amex) was established in 1849 during the California Gold Rush. The exchange was closely tied to the mining industry and it was well-known for accepting companies that were turned away by the New York Stock Exchange. Its success continued throughout the next 100 years before being bought out by NASDAQ in the 1990s. The American Stock Exchange regained its independence again in 2003.

The newest stock exchange in the United States (and second largest) is NASDAQ. Originally founded as the National Association of Securities Dealers, the exchange is more widely known as NASDAQ. The exchange was founded in 1971.

At the time of its inception, NASDAQ was the first electronic stock market and was only a computer bulletin board system. It was several years before NASDAQ connected buyers and sellers. In addition to being the first electronic stock market NASDAQ was also the first stock exchange to allow trading online. Until that time everything had been done with paper. The ability to trade online in real time was a concept that was foreign to traders. The ability to buy and sell instantly forever changed the landscape of the stock market, making it more accessible to not only brokers and traders, but the average person.

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