The New York Stock Exchange is the largest in the world.
A stock exchange market is defined by the New York Stock Exchange as "an organized marketplace for securities featured by the centralization of supply and demand." This organization of buyers, sellers, traders and brokers defines the activity of a stock market. The marketplace enables stocks, bonds, commodities and other financial products and services to be marketed and sold, under a unified market structure and under financial controls, oversight and regulations.
History of the Stock Market
The history of the modern stock market can be traced back to the oldest exchanges in the world. In 16th century Amsterdam, the Dutch East India Co. became the first organization to sell shares, based on a need to raise capital for expansion and to fund the commodities it was bringing from the Far East. In 1607 a formal commodities exchange was commissioned by the City of Amsterdam to house trading. In 1698, John Costaing issued the first listing of stocks and commodity prices in a coffeehouse in London, the precursor to the first modern exchange.
Functions of a Stock Market
A stock market's primary role is to be a marketplace and a place for companies and organizations to raise capital and provide liquidity---i.e., a place to liquidate their holdings. Companies raise capital through the issuance of shares and debt, in the form of bonds. These shares are available to the public and are held by institutions and private investors. Governments raise money on the markets through bonds called Treasuries (or gilts in the U.K.). Physical commodities like gold, silver, oil and corn are traded on spot and futures markets.
Different U.S. Stock Markets
The most well-known and largest stock market in the world is the New York Stock Exchange. The NYSE provides a listing for large and medium-sized companies and household names like General Electric, Coca-Cola and AT&T. It applies minimum listing standards and regulations governing size, reporting and market activity. The Nasdaq market mostly lists technology shares, and its popular stocks include Apple, Microsoft, Google and Yahoo!. The Amex market is also a prestigious market exchange, with small and medium-sized companies. Smaller companies can be found on the over-the-counter (OTC) market.
Stock Exchange Indexes
The Dow Jones industrial average is the leading index quoted on the market. It reflects the top 30 companies on the NYSE, like GE, American Express, 3M and Exxon Mobil and is the most commonly quoted index in the news. The S&P 500 lists 500 companies, covering about 95 percent of all shares traded. The Russell 2000 index reflects the quotes of 98 percent of all stocks traded.
Electronic Exchanges
The stock market was traditionally a paper-based trading system. The advent of electronic trading has led to the global connectivity of buyers and sellers. Electronic exchanges and electronic communications networks (ECN) trade Nasdaq stocks, connecting buyers and sellers directly and bypassing the traditional market makers. This has become an alternative way to trade and deal in stocks on the Nasdaq and increasingly on other exchanges.
