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There are two basic types of stock markets:
- physical location exchanges, which include the New York Stock Exchange (NYSE), and
- electronic dealer-based markets that include the Nasdaq stock market, the less formal over-the-counter market, and the recently developed electronic communications networks (ECNs)
They are the world’s two leading stock exchanges.
A Stock market or exchange is a facility where people can buy or sell stocks, bonds, and securities through brokers and traders. Most often the traditional Exchange floor is where the selling and buying take place.
However, modern trading is now also done through electronic networks for its speed and lesser cost.
But there is the place where we can be faced with some problems.
The dark pools, electronic communication networks, and alternative trading systems are also using as trading locales.
Buyers and sellers are stock investors who may profit or lose capital depending on whether there is a bull or bear market, respectively. The stock market is usually preferred by investors for transparency.
As of April 2018, the New York Stock Exchange ranked as the largest by market capitalization with a value of tradable shares amounting to 23.14 trillion U.S. dollars.
Let’s say several words about each type of markets.
The physical location exchanges are formal organizations. They have tangible, physical locations and trading in designated securities.
There are exchanges for stocks, bonds, commodities, futures, and options.
The physical location exchanges are auction markets with securities going to the highest bidder. Buyers and sellers place orders with their brokers who then execute those orders by matching buyers and sellers.
Although specialists assist in providing continuity to the markets.
The electronic dealer-based market is consists of hundreds of brokers and dealers who are connected electronically by telephones and computers.
The dealer-based market facilitates the trading of securities that are not listed on a physical location exchange.
A dealer market includes all facilities to conduct security transactions not made on the physical location exchanges.
These facilities include:
- the relatively few dealers who hold inventories of these securities and who are said to make a market in these securities;
- the thousands of brokers who act as agents in bringing the dealers together with investors;
- The computers, and networks that provide a communication link between dealers and brokers. Dealers continuously post a price at which they are willing to buy the stock (the bid price. Also, a price at which they are willing to sell the stock (the ask price). The ask price is always higher than the bid price. The difference (or “bid-ask spread”) represents the dealer’s markup or profit.
More about the leading stock exchanges
At the end of April 2018, the NYSE is the largest stock exchange operator by market capitalization. The total value of tradable shares amounting to 23.14 trillion U.S. dollars.
That is three times larger than the second largest operator, NASDAQ.
NASDAQ was the first stock market to start trading online. But NYSE is the first global equities exchange.
NYSE exchange has successfully grown into the powerhouse that it is today, due to a series of international mergers. The
NYSE merged with Euronext. That was the first integrated cross-border exchange. Now, NYSE trades almost twice as many foreign companies than NASDAQ.
The interesting fact is that the world’s two largest stock exchanges lie only a few minutes apart in New York City, United States.
The New York Stock Exchange founded on May 17, 1792, is the world’s biggest stock exchange in trade value and has a capitalization of $19.223 Trillion USD. Notable market events have included the 1929 Wall Street Crash, the 1987 Black Tuesday, and the 1997 mini-crash.
The second one on this the list is the tech-heavy NASDAQ. It is founded on February 4, 1971, also in New York, with a market capitalization of $6.831 Trillion. It is owned by NASDAQ, Inc, as the first exchange to use the electronic system in trading.
The other leading stock exchanges are the following:
Third on the list is the London Stock Exchange Group in the United Kingdom and Italy founded in 1801 and has a capitalization of $6.187 Trillion.
Notable market events have included the 2007 acquisition of Borsa Italiana, the 2009 acquisition of Millennium Information Technologies, Ltd., and the 2011 merger with TMX Group.
Asian leading stock exchanges
There is also the Japan Exchange Group in Japan founded on January 1, 2013, with a market capitalization of $4.485 Trillion.
It was formed with the merger of the Osaka Securities Stock Exchange and the Tokyo Stock Exchange. Notable market events have included the 2013 JPX was launched.
Fifth on the list can be the Shanghai Stock Exchange in China re-established on November 26, 1990, after a 41-year hiatus. With a market capitalization of $3.986 Trillion.
Memorable market events have included the 1891 founding of the first Chinese stock exchange. At the year 1904 registering of it as Shanghai Stock Exchange. In 1941 it stopped operations due to Japanese occupation and the 1949 closing during the Chinese Revolution.
Also, there is the Hong Kong Stock Exchange in Hong Kong (SAR China founded in 1891 with a market capitalization of $3.325 Trillion. It is owned by Hong Kong Exchanges and Clearing.
In 1914 renaming of it as the Hong Kong Stock Exchange, and the 2000 HK Exchanges and Clearing acquisition of the HK Stock Exchange.
And the Shenzhen Stock Exchange in China founded on December 1, 1990, with a market capitalization of $2.285 Trillion. It also owns a tech exchange, ChiNext, founded on October 23rd, 2009.
Canadian leading stock exchanges
Also, TMX Group in Canada founded on May 1, 2008, with a market capitalization of $1.939 Trillion.
It also owns the Montreal Exchange, NGX, TSX Alpha Exchange, and several other exchanges. The TMX Group is founded after the acquisition of Montreal Exchange by TSX Group.
European leading stock exchanges
Of course, the first is the London Stock Exchange Group. But, there are also the Euronext, United Kingdom, Belgium, Portugal, France, and the Netherlands with a market capitalization of $3.321 Trillion.
Notable market events have included the 2007 merger with NYSE, the 2013 International Exchange acquisition of NYSE Euronext, and the 2014 Euronext IPO.
The Tenth is the Deutsche Borse AG in Germany came in 1992 with a market capitalization of $1.762 Trillion. It runs the Frankfurt Stock Exchange and the Scoach. It is located in Frankfurt.
You would also like to know more about the Australian Stock Market
The bottom line
The stock exchanges in developed countries, as well as those exchanges in developing countries, serve as measurements of where the national economy is headed.
Moreover, the largest stock exchanges play an important part in the world economy. The stock exchanges are A dealer market includes all facilities to conduct security transactions not made on the physical location exchanges. for the economic development of many developing countries.
In developing countries, there are also stock exchanges.
And the stock exchanges in the developed countries are mature and are the major backbones of that country’s economy.
Financial market growth equals higher standards of living as well as create more jobs. Mature financial markets support funding international projects. This funding mitigates poverty.