Handbook of Investment Administration

Chapter 3

TRADING

3.1 INTRODUCTION

The concept of a stock market has been around for hundreds of years and there are examples of their early development across Europe, including the trading of government debt by brokers in twelfth-century France.

The first official stock exchange is, however, recognised as being the Amsterdam Stock Exchange which was established in 1602. At the time, the Dutch government needed to reorganise its economy and came up with the novel idea of allowing shares to be issued to the public. The first stocks traded were shares in the Dutch East India Company which enabled the company to raise finance from the general public and become perhaps the first multinational.

By the early 1700s there were fully operational stock exchanges in France and England. The London Stock Exchange can trace its history back to the coffee houses of seventeenth-century London, from which the Exchange quickly grew to become the City's most important financial institution and the driver of the British industrial revolution.

The concept of publicly held equity spread across Europe and into the US where the forerunner of the New York Stock Exchange was established in 1792.

Stock exchanges are now regarded as an essential feature of modern economic systems and they operate in virtually every country around the world.

3.2 STOCK MARKET DEVELOPMENTS

The last 10 years have seen major activity in the industry with consolidation of trading and post-trading infrastructures taking place at ...