A Brief History of Exchanges

The term “trade” is a curious one when applied to our modern financial institutions. Indeed, by definition nothing is traded, per se. Rather, stocks and financial investments are paid for and sold. It is an exchange, hence the name: the New York Stock Exchange. It is not called the New York Stock Trading Center. Perhaps this could be reduced to semantic gamesmanship, but it should be kept in mind that when dealing with one’s financial portfolio, you are dealing with gains and losses, purchases and value.

The term “trade” is a curious one when applied to our modern financial institutions. Indeed, by definition nothing is traded, per se. Rather, stocks and financial investments are paid for and sold. It is an exchange, hence the name: the New York Stock Exchange. It is not called the New York Stock Trading Center. Perhaps this could be reduced to semantic gamesmanship, but it should be kept in mind that when dealing with one’s financial portfolio, you are dealing with gains and losses, purchases and value.

With approximately $29 trillion worth of capitalized wealth invested, the New York Stock Exchange (NYSE) is the largest exchange on the planet. It is not, however, the oldest. Indeed, it can only trace its origins back to 1792. The honor of the oldest exchange belongs to the Amsterdam Stock Exchange, founded in 1602. The London Stock Exchange, by contrast, was founded in 1801.

The world of the screaming floor trader flashing any number of fingers, a billet in hand, has been supplanted by online trading technologies. To be sure, you will still find brokers on the floor of the exchange, but the billet has been replaced by a touch screen and instead of screaming, they are all wired with earpieces and communication devices. Moreover, though still a profession dominated by men, you can now find a fair share of female brokers.

Again, though it is not the oldest exchange, the NYSE is the wealthiest. It enjoys the brisk buying and selling of approximately $1 billion in stocks, bonds and mutual funds a day. Its tech-centric cousin, the NASDAQ, can only muster a measly $50 million a day. The NYSE, for all intents and purposes, is the king of the exchanges — for now, and perhaps the foreseeable future, but it is worthy noting that the rise of some Asian markets does pose a challenge to this supremacy.

The second largest exchange in the world, the Shanghai Stock Exchange was founded in 1891. To date, it has ballooned to incorporate approximately $4 trillion in aggregated wealth. Granted a roughly $4 trillion, it is approximately $25 trillion short of the American mark, but given that the Chinese government has only dabbled with a free market for 20 or so years, it is a phenomenal example of unprecedented growth. The future is indeed bright for the land of the Middle Kingdom.

The world of online trading need not be relegated to the dominion of Wall Street. Remember, have laptop will travel. You can begin to day trade along with the best of them.

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