Discovering Stock Exchanges

Stock exchanges serve as vibrant marketplaces where stocks are bought and sold, whether in physical or electronic form. They provide companies with the opportunity to raise capital through an initial public offering (IPO). With the rise of electronic trading and globalization, a trade occurring in New York could involve a buyer located in Zurich.

Understanding Stock Exchange Operations

A stock exchange can be physical or virtual, with electronic trading dominating the landscape. The United States boasts the New York Stock Exchange (NYSE) and the Nasdaq as major exchanges. While the NYSE mandates a minimum share price of $4 for listed companies, the Nasdaq is renowned as the first electronic exchange facilitating stock buying and selling without a trading floor.

If a stock is not listed on an exchange, it can still trade in the over-the-counter (OTC) market, typically involving riskier penny stocks. Stockholders utilize the exchange's secondary market to sell their stakes, with buyers and sellers often unknown to each other, spanning across different global entities.

Historical Milestones

In the United States, the Buttonwood Agreement signed under a buttonwood tree on Wall Street in 1792 established the New York Stock & Exchange Board (NYSEB), which later became the New York Stock Exchange. The proliferation of electronic trading led to the closure or absorption of regional stock exchanges, making electronic networks more efficient in connecting buyers and sellers globally.

Global Presence of Stock Exchanges

Stock exchanges are not limited to the United States, with major exchanges such as the Tokyo Stock Exchange in Japan, the Shanghai Stock Exchange in China, and the London Stock Exchange Group in the UK and Italy, among others, providing platforms for stock trading worldwide.