exchange (organized market)
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An exchange, bourse (), trading exchange or trading venue is an organized
market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entertainment, and media Films *Market (1965 film), ''Market'' (1965 ...
where (especially) tradable
securities A security is a tradable financial asset A financial asset is a non-physical asset In financial accounting Financial accounting is the field of accounting Accounting or Accountancy is the measurement, processing, and communication o ...
,
commodities In economics, a commodity is an economic goods, good, usually a resource, that has full or substantial fungibility: that is, the Market (economics), market treats instances of the good as equivalent or nearly so with no regard to who Production ...
,
foreign exchange The foreign exchange market (Forex, FX, or currency market) is a global decentralization, decentralized or Over-the-counter (finance), over-the-counter (OTC) market for the trading of currency, currencies. This market determines Exchange rate ...
,
futures Futures may mean: Finance *Futures contract, a tradable financial derivatives contract. *Futures exchange, a financial market where futures contracts are traded. *Futures (magazine), ''Futures'' (magazine), an American finance magazine. Music *Fu ...
, and options contracts are bought and sold.


History


12th century: Brokers on the Grand Bridge, France

In the twelfth century, foreign exchange dealers in
France France (), officially the French Republic (french: link=no, République française), is a transcontinental country This is a list of countries located on more than one continent A continent is one of several large landmasses ...

France
were responsible for controlling and regulating the debts of agricultural communities on behalf of banks. These were actually the first brokers. They met on the Grand Bridge in Paris, the current
Pont au Change The Pont au Change is a bridge A bridge is a Nonbuilding structure, structure built to Span (engineering), span a physical obstacle, such as a body of water, valley, or road, without closing the way underneath. It is constructed for the purpose ...

Pont au Change
. It takes its name from the forex brokers.


13th century: ''Huis ter Buerze'', Belgium

The term ''bourse'') which was later used as
bursa (ancient Greek Ancient Greek includes the forms of the used in and the from around 1500 BC to 300 BC. It is often roughly divided into the following periods: (), Dark Ages (), the period (), and the period (). Ancient Greek wa ...
in
Medieval Latin Medieval Latin was the form of Latin Latin (, or , ) is a classical language A classical language is a language A language is a structured system of communication Communication (from Latin ''communicare'', meaning "to share ...
to refer to the "purse". is related to the 13th-century inn named "''
Huis ter Beurze The Hui people ( zh, c=, p=Huízú, w=Hui2-tsu2, Xiao'erjing Xiao'erjing or Xiao'erjin or Xiaor jin or in its shortened form, Xiaojing, literally meaning "children's script" or "minor script" (cf. "original script" referring to the original ...
''" owned by family in
Bruges Bruges ( , nl, Brugge ; ; german: Brügge ) is the capital and largest city of the Provinces of Belgium, province of West Flanders in the Flemish Region of Belgium, in the northwest of the country, and the seventh-largest city of the country b ...

Bruges
,
Belgium Belgium ( nl, België ; french: Belgique ; german: Belgien ), officially the Kingdom of Belgium, is a country in Western Europe Western Europe is the western region of Europe. The region's countries and territories vary depending on cont ...

Belgium
, where traders and foreign merchants from across Europe, especially the Italian Republics of
Genoa Genoa ( ; it, Genova ; locally ; lij, Zêna ; English, historically, and la, Genua) is the capital of the Regions of Italy, Italian region of Liguria and the List of cities in Italy, sixth-largest city in Italy. In 2015, 594,733 people lived ...
,
Florence Florence ( ; it, Firenze ) is a city in Central-Northern Italy Italy ( it, Italia ), officially the Italian Republic ( it, Repubblica Italiana, links=no ), is a country consisting of Italian Peninsula, a peninsula delimited by the Al ...
and
Venice Venice ( ; it, Venezia ; vec, Venesia or ) is a city in northeastern Italy Italy ( it, Italia ), officially the Italian Republic ( it, Repubblica Italiana, links=no ), is a country consisting of delimited by the and surrounding ...
, conducted business in the late medieval period. The building, which was established by Robert van der Buerze as a hostelry, had operated from 1285. Its managers became famous for offering judicious financial advice to the traders and merchants who frequented the building. This service became known as the "Beurze Purse" which is the basis of ''bourse'', meaning an organized place of exchange. Eventually, the building became solely a place for trading in commodities. During the 18th century, the façade of the ''Huis ter Beurze'' was rebuilt with a wide frontage of
pilaster In classical architecture Classical architecture usually denotes architecture upright=1.45, alt=Plan d'exécution du second étage de l'hôtel de Brionne (dessin) De Cotte 2503c – Gallica 2011 (adjusted), Plan of the second floor (at ...

pilaster
s. However, in 1947 it was restored to its original medieval appearance.


13th century–17th century: Italian city-states, Belgium and the Netherlands

In the thirteenth century, the Lombard bankers were the first to share state claims in Pisa, Genoa, and Florence. In 1409, the phenomenon was institutionalized by the creation of the Exchange Bruges. It was quickly followed by others, in Flanders and neighboring countries (Ghent and Amsterdam). It is still in Belgium and the first building designed to house a scholarship was built in Antwerp. The first scholarship organized in France was born in Lyon in 1540. The first documented crash took place in 1636 in Holland. The prices of tulip bulbs reaching excessively high levels, known as the
Tulip mania Tulip mania ( nl, tulpenmanie) was a period during the Dutch Golden Age The Dutch Golden Age ( nl, Gouden Eeuw ) was a period in the history of the Netherlands, roughly spanning the era from 1588 (the birth of the Dutch Republic) to 1672 ...
. The price collapsed on October 1. In the seventeenth century, the Dutch were the first to use the stock market to finance companies. The first company to issue stocks and bonds was the
Dutch East India Company The Dutch East India Company, officially the United East India Company ( nl, Vereenigde Oost Indische Compagnie; VOC), was a multinational corporation A multinational company (MNC) is a corporate A corporation is an organization—u ...

Dutch East India Company
, introduced in 1602.


17th century: England and France

The
London Stock Exchange London Stock Exchange (LSE) is a stock exchange A stock exchange, securities exchange, or bourse is an exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an Unincorporated area, unincorporated community ...
started operating and listing shares and bonds in 1688. In 1774, the Paris Stock Exchange (founded in 1724), say the courts, must now necessarily be shouted to improve the transparency of operations.


Contemporary history

In the nineteenth century, the industrial revolution enables rapid development of stock markets, driven by the significant capital requirements for the finance industry and transport. Since the computer revolution of the 1970s, we are witnessing the dematerialization of securities traded on the stock exchange. In 1971, the
NASDAQ The Nasdaq Stock Market () is an American stock exchange A stock exchange, securities exchange, or bourse is an exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an Unincorporated area, unincorpora ...
became the . In France, the dematerialization was effective from November 5, 1984. The development of information technology during the late part of the 20th century led to a new type of electronic exchange that replaced the more traditional physical markets. This led to new definitions in
financial regulation Financial regulation is a form of regulation Regulation is the management of complex systems A complex system is a system composed of many components which may interaction, interact with each other. Examples of complex systems are Earth's ...
s that recognized these new exchanges, such as the
Multilateral trading facility A multilateral trading facility (MTF) is a European Union financial regulation, regulatory term for a self-regulated financial trading venue. These are alternatives to the traditional stock exchanges where a market maker, market is made in securiti ...
in Europe and
Alternative trading system Alternative trading system (ATS) is a US and Canadian Financial regulation, regulatory term for a non-exchange trading venue that matches buyers and sellers to find counterparties for transactions. Alternative trading systems are typically regulate ...
in the United States. Regulators also started using the term ''trading venue'' to describe the wider definition which encompasses both traditional exchanges and electronic exchanges.


Description

Exchanges bring together brokers and dealers who buy and sell these objects. These various
financial instrument Financial instruments are monetary contracts A contract is a legally binding document between at least two parties that defines and governs the rights and duties of the parties to an agreement. A contract is legally enforceable because it me ...
s can typically be sold either through the exchange, typically with the benefit of a
clearing house Clearing house or Clearinghouse may refer to: Banking and finance * Clearing house (finance) A clearing house is a financial institution formed to facilitate the exchange (i.e., ''Clearing (finance), clearance'') of payments, securities, or deri ...
to reduce
settlement risk Settlement risk is the risk that a counterparty (or intermediary agent) fails to deliver a Security (finance), security or its Value (economics), value in cash as per agreement when the security was traded after the other counterparty or counterpa ...
. Exchanges can be subdivided: * By objects sold: **
Stock exchange A stock exchange, securities exchange, or bourse is an exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an Unincorporated area, unincorporated community in Green Township, Morgan County, Indiana, Green To ...
or securities exchangeStock Exchanges are the most publicly recognized places for buying and selling shares. They are easily the single most important component of the secondary market for corporate shares
Over-the-Counter Options
About.com.
**
Commodities exchange A commodities exchange is an exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an Unincorporated area, unincorporated community in Green Township, Morgan County, Indiana, Green Township, Morgan County, India ...
**
Foreign exchange market The foreign exchange market (Forex, FX, or currency market) is a global decentralized Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision maki ...
– is rare today in the form of a specialized institution * By type of trade: ** Classical exchange – for spot trades **
Futures exchange A futures exchange or futures market is a central financial exchange An exchange, bourse (), trading exchange or trading venue is an organized market where (especially) tradable securities A security is a tradable financial asset. The term ...
or futures and options exchange – for derivatives In practice, futures exchanges are usually commodity exchanges, i.e., all
derivatives Derivative may refer to: In mathematics and economics *Brzozowski derivative in the theory of formal languages *Derivative in calculus, a quantity indicating how a function changes when the values of its inputs change. *Formal derivative, an opera ...
, including financial derivatives, are usually traded at commodity exchanges. This has historical reasons: the first exchanges were stock exchanges. In the 19th century, exchanges were opened to trade
forward contract In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed on at the time of conclusion of the contract, making it a type of derivat ...
s on
commodities In economics, a commodity is an economic goods, good, usually a resource, that has full or substantial fungibility: that is, the Market (economics), market treats instances of the good as equivalent or nearly so with no regard to who Production ...
. Exchange-traded forward contracts are called
futures contract In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money availabl ...
s. These "
commodity exchanges A commodities exchange is an Exchange (organized market), exchange, or market, where various Commodity, commodities are traded. Most commodity markets around the world trade in agricultural products and other raw materials (like wheat, barley, su ...
" later started offering future contracts on other products, such as interest rates and shares, as well as
option Option or Options may refer to: Computing *Option key, a key on Apple computer keyboards *Option type, a polymorphic data type in programming languages *Command-line option, an optional parameter to a command *OPTIONS, an Hypertext Transfer Prot ...
s contracts; now they are generally known as
futures exchange A futures exchange or futures market is a central financial exchange An exchange, bourse (), trading exchange or trading venue is an organized market where (especially) tradable securities A security is a tradable financial asset. The term ...
s. For details, see: *
Stock exchange A stock exchange, securities exchange, or bourse is an exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an Unincorporated area, unincorporated community in Green Township, Morgan County, Indiana, Green To ...
(
securities exchange A stock exchange, securities exchange, or bourse is an exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an Unincorporated area, unincorporated community in Green Township, Morgan County, Indiana, Green To ...
),
List of stock exchanges This is a list of major stock exchanges. Those futures exchanges that also offer trading in security (finance), securities besides trading in futures contracts are listed both here and in the list of futures exchanges. There are sixteen stock ex ...
, :Stock exchanges * Commodity exchange (
futures exchange A futures exchange or futures market is a central financial exchange An exchange, bourse (), trading exchange or trading venue is an organized market where (especially) tradable securities A security is a tradable financial asset. The term ...
),
List of futures exchanges This is a list of notable futures exchanges. Those stock exchanges that also offer trading in futures contract In finance Finance is the study of financial institutions, financial markets and how they operate within the financial sy ...
, :Futures exchanges *
Foreign exchange market The foreign exchange market (Forex, FX, or currency market) is a global decentralized Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision maki ...


See also

*
Commodity market A commodity market is a market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entertainment, and media Films ...
*
Private electronic market A private electronic market (PEM) uses the Internet The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a ...
*
Stock market A stock market, equity market, or share market is the aggregation of buyers and sellers of stock In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in whic ...

Stock market
*
List of stock exchanges This is a list of major stock exchanges. Those futures exchanges that also offer trading in security (finance), securities besides trading in futures contracts are listed both here and in the list of futures exchanges. There are sixteen stock ex ...
*
Over-the-counter (finance) Over-the-counter (OTC) or off-exchange trading is done directly between two parties, without the supervision of an exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an Unincorporated area, unincorporated com ...


Notes and Citations

;Notes ;Citations


References

* * *


External links

* {{Authority control Commodity markets Stock market