European stock market
The forerunners of modern stock markets were medieval bill fairs and permanent bill markets that came and went from time to time in the 13th and 14th centuries. The emergence of the first professional participants in the securities market and the first exchanges on which transactions with both commodities and bills were made is associated with the trade in bills. The first exchanges on which transactions with securities were carried out are considered to be created in the 16th century. institutions in the Netherlands Antwerp and French Lyon. Due to various circumstances, these exchanges ceased to exist in the second half of the 16th century.
The stock market in the modern sense was born at the end of the 16th century. in connection with the strengthening of the emission activity of the state and the emergence of joint-stock companies. The first of which are historically considered to have been created in the 16-17 centuries. in England: Moscow, Levant, Baltic, East India companies, as well as the Dutch United East India Company. The shares of trading companies soon after their creation became the subject of sale and purchase transactions both in England and in Holland.
From 1600 to 1657 the British East India Company operated on the basis of a system of permanently renewable capital. Shares of participants returned to them after each voyage (expedition). Only in 1657 the charter of the company was changed in such a way that it turned into a joint stock company in the modern sense. The company started paying dividends rather than dividing gross profit. The exit from the company has become much easier.
In the Dutch East India Company for 40 years, dividends on stocks have very rarely been paid in cash – mostly in commodities (spices). Only in 1644 did the company begin to pay dividends exclusively in cash. Over the 200 years of its existence, the company has regularly paid dividends, the average annual rate of which was 18% of the nominal.
However, up to the 19th century. joint stock companies remained a rarity and their securities provided an insignificant share of stock turnover.
Most of the transactions with securities were in government securities – it was trading in government bonds that contributed to the emergence of modern stock exchanges and investment institutions.
The oldest stock exchange that has survived to this day is the Amsterdam Stock Exchange, which was organized in 1611.
Until 1913, the Amsterdam Stock Exchange was a universal stock exchange that traded both various goods and securities. It was here that all the methods of securities trading that exist to this day were tested – urgent transactions, including transactions with a premium (options), report and deport transactions, margin transactions, etc.
The technique of trading in securities was initially similar to the technique of stock trading in commodities, but gradually specific norms of behavior developed. According to the testimony of contemporaries, a particular difficulty was presented by the prohibition, introduced in 1621, “not to use foul language and not to use offensive language”.
In the early years, admission to the exchange was free, any visitor had the right to conclude a deal with anyone. The conclusion of the deal was completed with a mandatory handshake, which was part of the trading rules.