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An exchange, bourse (), trading exchange or trading venue is an organized market where (especially)
tradable securities Liquid tradable securities (or LTS) is a generic phrase for a wide range of financial instruments. It often differentiates financial instruments that are easily tradable (or tradeable) as opposed to those that require the permission of the company ...
,
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 decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all as ...
, futures, 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 ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...
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. It takes its name from the forex brokers.


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

The term ''bourse'') which was later used as
bursa ( grc-gre, Προῦσα, Proûsa, Latin: Prusa, ota, بورسه, Arabic, Arabic:بورصة) is a city in northwestern Turkey and the administrative center of Bursa Province. The list of cities in Turkey, fourth-most populous city in Turkey a ...
in
Medieval Latin Medieval Latin was the form of Literary Latin used in Roman Catholic Church, Roman Catholic Western Europe during the Middle Ages. In this region it served as the primary written language, though local languages were also written to varying deg ...
to refer to the "purse". is related to the 13th-century inn named "'' Huis ter Beurze''" owned by family in
Bruges Bruges ( , nl, Brugge ) is the capital and largest city A city is a human settlement of notable size.Goodall, B. (1987) ''The Penguin Dictionary of Human Geography''. London: Penguin.Kuper, A. and Kuper, J., eds (1996) ''The Social Scienc ...
,
Belgium Belgium, ; french: Belgique ; german: Belgien officially the Kingdom of Belgium, is a country in Northwestern Europe. The country is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeast, France to the ...
, where traders and foreign merchants from across Europe, especially the Italian Republics of
Genoa Genoa ( ; it, Genova ; lij, Zêna ). 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 within the city's administrative limits. As of t ...
,
Florence Florence ( ; it, Firenze ) is a city in Central Italy and the capital city of the Tuscany region. It is the most populated city in Tuscany, with 383,083 inhabitants in 2016, and over 1,520,000 in its metropolitan area.Bilancio demografico ...
and
Venice Venice ( ; it, Venezia ; vec, Venesia or ) is a city in northeastern Italy and the capital of the Veneto Regions of Italy, region. It is built on a group of 118 small islands that are separated by canals and linked by over 400  ...
, conducted business in the late medieval period. The building, which was established by Robert van der Beurze 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, a pilaster is an :Architectural elements, architectural element used to give the appearance of a supporting column and to articulate an extent of wall, with only an ornamental function. It consists of a flat surface r ...
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 when contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels. The major acceleration started in 1634 and then d ...
. 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 United East India Company ( nl, Verenigde Oostindische Compagnie, the VOC) was a chartered company established on the 20th March 1602 by the States General of the Netherlands amalgamating existing companies into the first joint-stock ...
, introduced in 1602.


17th century: England and France

The
London Stock Exchange London Stock Exchange (LSE) is a stock exchange in the City of London, England, United Kingdom. , the total market value of all companies trading on LSE was £3.9 trillion. Its current premises are situated in Paternoster Square close to St Paul ...
started operating and listing shares and bonds in 1688. The
Paris Stock Exchange Euronext Paris is France's securities market, formerly known as the Paris Bourse, which merged with the Amsterdam, Lisbon, and Brussels exchanges in September 2000 to form Euronext NV. As of 2022, the 795 companies listed had a combined market ...
was founded in 1724. In 1774, the courts required that it be shouted to improve the transparency of operations.


Contemporary history

In the nineteenth century, the industrial revolution enabled rapid development of stock markets, driven by the significant capital requirements for the finance industry and transport. Since the computer revolution of the 1970s, there has been a dematerialization of securities traded on the stock exchange. In 1971, the
NASDAQ The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City New York, often called New York City or NYC, is the ...
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 or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled ...
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 securi ...
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 Contract, contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity or a contractual right to receive or deliver in ...
s can typically be sold either through the exchange, typically with the benefit of a clearing house 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 counterp ...
. Exchanges can be subdivided: * By objects sold: **
Stock exchange A stock exchange, securities exchange, or bourse is an Exchange (organized market), exchange where stockbrokers and stock trader, traders can buy and sell security (finance), securities, such as share (finance), shares of stock, Bond (finance) ...
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 (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, ...
**
Foreign exchange market The foreign exchange market (Forex, FX, or currency market) is a global decentralization, decentralized or Over-the-counter (finance), over-the-counter (OTC) Market (economics), market for the trading of currency, currencies. This market d ...
– 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 where people can trade standardized futures contract In finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not syno ...
or futures and options exchange – for derivatives In practice, futures exchanges are usually commodity exchanges, i.e., all derivatives, 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 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of Production (economics), production, Distribution (economics), distribution, and Consumpt ...
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 and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of Production (economics), production, Distribution (economics), distribution, and Consumpti ...
s. These " commodity exchanges" later started offering future contracts on other products, such as interest rates and shares, as well as options contracts; now they are generally known as
futures exchange A futures exchange or futures market is a central financial exchange where people can trade standardized futures contract In finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not syno ...
s. For details, see: *
Stock exchange A stock exchange, securities exchange, or bourse is an Exchange (organized market), exchange where stockbrokers and stock trader, traders can buy and sell security (finance), securities, such as share (finance), shares of stock, Bond (finance) ...
(
securities exchange A stock exchange, securities exchange, or bourse is an Exchange (organized market), exchange where stockbrokers and stock trader, traders can buy and sell security (finance), securities, such as share (finance), shares of stock, Bond (finance) ...
),
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 where people can trade standardized futures contract In finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not syno ...
),
List of futures exchanges This is a list of notable futures exchanges. Those stock exchange A stock exchange, securities exchange, or bourse is an Exchange (organized market), exchange where stockbrokers and stock trader, traders can buy and sell security ...
, :Futures exchanges *
Foreign exchange market The foreign exchange market (Forex, FX, or currency market) is a global decentralization, decentralized or Over-the-counter (finance), over-the-counter (OTC) Market (economics), market for the trading of currency, currencies. This market d ...


See also

*
Commodity market A commodity market is a Market (economics), market that trades in the Primary sector of the economy, primary economic sector rather than manufactured products, such as Cocoa bean, cocoa, fruit and sugar. Hard commodities are mined, such as gol ...
* Private electronic market *
Stock market A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, as ...
*
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 or pink sheet trading is done directly between two parties, without the supervision of an exchange (organized market), exchange. It is contrasted with exchange trading, which occurs via exchanges. ...


Notes and citations

;Notes ;Citations


References

* * *


External links

* {{Authority control Commodity markets Stock market