stocks

WHAT IS THE STOCK EXCHANGE

Written by cool

WHAT IS THE STOCK EXCHANGE

 

In the literature and practice, there are a large number of different definitions, opinions and attitudes regarding the question “what is a stock exchange”. The stock exchange, in the simplest vocabulary, is a place where supply and demand for a specific goods meet, at a specific time, in a specific place. It could be said that, when it comes to the stock market, there is a lot of “correct”, which is true because it is its main feature that distinguishes it from all other informal, supply and demand meetings. merchants and businessmen from one city and region gathered. The beginnings of organized trade, which resembled a stock exchange, are related to Flanders and the city of Bruges, where people in the XVI century,

Today, the stock exchange is a place where supply and demand for precisely defined objects of trade meet, and that object of trade must be subject to typification and standardization. The process of standardization achieves that the object of trade is completely identical in its characteristics in small and large quantities. This is easy to do with low-grade goods, while with the final products, due to the variety, it is very difficult. Standardization and typification are necessary because the stock exchange trades on the word, ie on trust. With the development of trade, this “trust” is institutionalized and is replaced by a network of rules by which it is traded.

The meeting place of supply and demand has changed a lot over time and has moved from city squares, through inns and specialized buildings, all the way to the global market, interconnected through modern technologies. All this today enables trading to be done 24 hours a day, because when one stock exchange closes, at the other end of the world, the other stock exchange is just starting to work.

Considering the subject of trading on the stock exchange, they are divided into securities and commodity exchanges. If we talk about the beginnings of the stock exchange trade, it is easy to imagine that the first transaction, which could be called a stock exchange, was a transaction related to paper – most likely some kind of written obligation for future collection, which changed owner before maturity. Unlike securities exchanges, the forerunner of commodity exchanges can be considered large fairs and fairs, where, among other things, goods were sold. The key difference between fairs and stock exchanges lies in the fact that they were traded on the basis of a sample, ie goods on the spot, while the stock exchange is traded on the word.

In the end, we come to the answer to the question of what the stock market is. From all the above, we can conclude that the stock exchange is an organized place, where at a specific time, there is a meeting of supply and demand of standardized stock exchange material, according to specific rules by specific people. When asked what the basic postulates of the stock exchange are, it can be said that they are trust and security that derive from its very definition. If the stock market were not so precise, it would not have its basic postulates, nor itself.

 

THE BEGINNING, ORIGIN AND DEVELOPMENT OF THE STOCK EXCHANGE

 

The development of stock exchanges and trading on them is a consequence of the development of a specific market. The stock exchange emerged spontaneously, from the market itself, ie from its needs. For this reason, the emergence, expansion and development of stock exchanges and operations on them coincides with the expansion and conquest of new markets, both spatially and technologically.

The roots of the first trade from which the stock exchange got its name are connected to Flanders, the city of Bruges and the 16th century. However, today’s major stock markets emerged somewhat later. The beginnings of the New York Stock Exchange date back to 1792, when 24 brokers gathered and signed the Batonwood Agreement, which is the founding act of the world’s largest stock exchange. A few years later, more precisely in 1801, another large stock exchange was founded – the London Stock Exchange. In addition to this formation of stock exchanges in the institutional sense, the flows of creating trading items ran in parallel. Thus, the first issues of “shares” were created in the middle of the 16th century, when funds were collected for trade expeditions. Instead of taking loans, companies issued certificates (forerunners of shares) and thus collected money for expensive trips. Thus, the buyers of “certificates” became the owners of the goods that should be the subject of trade, and with it all the risks and benefits that travel and trade bring. The owners of the “shares” are left to hope for a good business result and thus a personal gain.