World Stock Exchanges-1

History of Stock Exchanges




By the eighteenth century the first stock exchanges were formed in England, the Netherlands and France.




In the American colonies, commerce was significant, but still heavily controlled by England.




An informal auction market was established in New York in 1752. As the colonial economy matured and demands for funds were made by local businesses, the auction market grew.




Following the American Revolution, a banking system was established and about 300 corporations were chartered by the new government.




These were primarily banks, insurance companies, dock construction firms and mining companies, and represented the first "industrials" of Wall Street.In 1792, many New York brokers formally agreed how security transactions would take place, what commissions would be charged and what preference would be given to members of the group in these business negotiations and transactions.




The pact organized the New York securities market as a definite institution.The dollar became recognized as a sound investment medium and large amounts of capital, now needed to finance both industry and government, led to the development of investment banking.




Because individual brokers could no longer handle the huge amounts of capital necessary to finance government and industry, syndicates, or groups of investment banking houses, would underwrite or provide the necessary funds directly to the corporate or government borrower for a fee.




In turn, the underwriters would sell shares to smaller investors.