stock exchange


stock exchange
= stock market
A market for the sale and purchase of securities, in which the prices are controlled by the laws of supply and demand. The first stock exchange was in Amsterdam, where in 1602 shares in the United East India Company could be traded. UK exchanges date from 1673, with the first daily official price lists being issued in London in 1698. Stock markets have developed hand-in-hand with capitalism, gradually growing in complexity and importance. Their basic function is to allow public companies, governments, local authorities, and other incorporated bodies to raise capital by selling securities to investors. They perform valuable secondary functions in allowing those investors to buy and sell these securities, providing liquidity, and reducing the risks attached to investment. Stock markets were abolished after World War II in communist-dominated states but with the collapse of communism many restarted. The major international stock exchanges are based in London, New York, and Tokyo. Outside the UK and English-speaking countries, a stock exchange is usually known as a bourse.

Accounting dictionary. 2014.