whenever we talk about the history of stock exchanges in the US in our mind only the name of NYSE comes first, whereas in its history before NYSE there were different stock exchanges about which we know today.
When investors talk about stocks, they mean those traded on major stock exchanges such as the New York Stock Exchange (NYSE). Investors may find it difficult to believe that the first stock exchange flourished for decades without ever trading a single stock. The evolution of stock markets began in Venetian states, continued in British coffeehouses, and culminated with the NYSE and others around the world. The Philadelphia Stock Exchange, formerly known as the Board of Brokers of Philadelphia, was created in 1790. Two years later, another major competitor emerged—the New York Stock Exchange.
History of Stock Exchanges in the United States
Stock exchanges are markets where US financial securities, commodities, derivatives, and other financial products are traded. Previously, traders and brokers would meet physically in a stock exchange building to trade stocks, but now the majority of financial trading is done electronically and automatically. Nonetheless, each exchange has its listing standards for organizations that want to participate. As a minimum, stock exchanges need regular financial disclosures, audited earnings, and low capital requirements.
Successful businesses looking to launch an initial public offering (IPO) or companies that operate publicly through shareholders are required to go through a stock market. Companies that list have to immediately adapt their operating speed since they are now subject to intense scrutiny and close observation because all of their financial information is available for review by prospective investors. Having said that, businesses also gain from greater visibility, In fact, “going public”—that is, becoming listed on a stock exchange—also makes a business more visible and attracts new partners, customers, and staff who see the company’s listing as an indication of success.
US stock exchanges
The New York Stock Exchange and Nasdaq are the two main financial securities exchanges in the United States.
1. New York Stock Exchange (NYSE)
Although the Philadelphia Stock Exchange was the country’s first, the New York Stock Exchange swiftly overtook it as the most significant. The New York Stock Exchange was founded by brokers beneath the spreading boughs of a buttonwood tree and was based on Wall Street.
The exchange’s position facilitated trade and business into and out of the US. Fees and listing requirements helped the New York Stock Exchange grow into a prosperous organization.
Nineteen years before the New York Stock Exchange opened for business in 1792, the first stock exchange in London was formally established in 1773. On the other hand, the New York Stock Exchange started trading equities right away after the London Stock Exchange (LSE) restricted shares.
For the next two centuries, the NYSE had relatively little domestic competition. As the American economy flourished, its stature abroad grew as well, and it quickly became the world’s most significant stock market. The exchange was marred by the Great Depression and the Wall Street bombing in 1920. The explosion, which is thought to have been carried out by anarchists, damaged numerous notable buildings on Wall Street and resulted in over 30 fatalities and hundreds of injuries.
2. American Stock Exchange
Originating as a market at the curbstone on Broad Street close to Exchange Place, the American Stock Exchange (AMEX) was dubbed the “Curb Exchange” until 1921. As it moved into new quarters on Trinity in 1921, most people regard this to be the year of its founding. But it didn’t formally become the American Stock Exchange until 1953.
3. Nasdaq (National Association of Securities Dealers Automated Quotation System)
The National Association of Securities Dealers (NASD), presently known as the Financial Industry Regulatory Authority (FINRA), created the Nasdaq. Ever since its establishment in 1971, this stock market has operated on a distinct model. It is not an actual location, unlike 11 Wall Street. Rather, it is an electronic trade execution network of computers. The implementation of an electronic trading platform enhanced trade efficiency and decreased the bid-ask spread.
As an electronic screen-based exchange, the Nasdaq is larger than AMEX. In contrast to the New York Stock Exchange, it is more contemporary and has a computerized system, which is why the National Association of Securities Dealers (NASD) created it in 1971. With some of the biggest corporations, including tech behemoths Apple, Google, Amazon, and Microsoft, it presently offers cheaper listing fees than the NYSE.
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