Stock exchanges form an important part of stock trading, as for stocks to be traded they have to be listed with the stock exchanges. The history of stock exchanges dates back to the eleventh century when the courtiers de change in France regulated and looked after the operations in the agricultural community. Today, the stock exchanges have come a long road with large exchanges across the world, for The Bombay Stock Exchange (BSE) in India, example, and the New York Stock Exchange (NYSE) in the United States. Some of these are physical exchanges, where trading happens on the floor, while some are electronic exchanges, where trading happens over electronic media.
Companies across the world have to fulfill certain criteria, with a view to be listed and their stocks to be traded on any stock exchange. These criteria comprise minimum market capitalization, the minimum number of shares, and minimum annual revenue produced by a company. Commonly, a company’s stocks are listed only in one exchange; however, big corporations may get themselves on the roster of more than one exchange. Various kinds of stock trading information are also provided to public through exchanges besides trading. The time for which activities take place under an exchange is referred to as its trading hours. No stock can be traded or trading information obtained after the trading hours are over for an exchange.
Stock exchanges play a very important role in shaping the economy of any country. Foremost, it is a mirror of a nation’s financial conditions. When the economy is booming, there is a flurry of work in the stock exchange. When it is n’t, the stock exchange may show a state that is known as financial ‘depression. ‘ The ownership of huge companies lies within the scope of its big shareholders. But shares floated by companies in stock exchanges, through their initial public offerings, help a common man or a very small investor to own a part (though may be small) of a very large company. This entitles him/her to the part of the profit incurred by these companies. On one hand, it helps companies to gather capital to develop their businesses and on the other, these small investors are made a part of this success. This may also assist in the redistribution of wealth from the richer section of the corporation to the common man.
Stocks are a means for companies to sell shares in their companies so as to obtain financing to fund the activities of their companies and to expand their business. The people who purchase these stocks are referred to as investors. Once the company is in profit, these profits are paid out to the investors who hold the stocks. The payments that are paid are called dividends.
Are There Any Stock Exchange Secrets?
Not only shares, but bonds and unit trusts are also traded on exchanges. These provide very good investment options to those who want to save and invest. While they enjoy the benefits out of such investments, the cash invested can be made ‘liquid’ and used for financial transactions occurring in the economy. Simply put, the government may borrow money from the public through the sale of bonds and utilize this money for some developmental activity. As there are numerous benefits that can be combined with stock exchanges, speculative trading can sometimes lead to the volatility of the stock market.
The number of stock exchanges around the world is quickly increasing. Although physical exchanges exist, the future of exchanges may lie in the electronic exchanges. Stock exchanges comprise an important part of the economy and will continue to be so with increasing number of people trusting to invest their money in stock trading.