The Stock Exchange
The Stock Exchange is the center where shares and bonds are bought and sold.
The capital of a company is divided in shares, the result of dividing the capital invested in a company into equal units.
People buy shares because they hope to make a profit by selling then after their value has risen.
However there are risks involved: shareholders risk a loss if value of the shares goes down or if there are no company profit to be divided, in which case they receive nothing. A bond is a document issued by a government or company when borrowing money from the public. The holder of the document is called bondholder. Trading on the Stock Exchange take place 24 hours a day in the main trading centers of the world, and as one market closes, another opens.
Who operates on the stock exchange?
When an investor wants to buy and sell shares he needs the assistance and advice of an intermediary, a broker-dealer, who buy and sells shares for the investor. An investor can be a bear or a bull about a particular kind of stock.
The term bear market describes a time when stock prices are generally falling. A bull market is a period when stock prices are generally rising.
The London Stock Exchange
The London Stock Exchange is on of the major Stock exchange in the world. In 1801 the London Stock Exchange was formed and become the accepted place to buy and sell shares. The structure of the London Stock Exchange changed on 27 October 1986, day know as the Big Bang, when it become known as the international Stock Exchange. Since then soe rules were changed:
Were abolished fixed commissions a new system of free competition was started, all firms became broker/dealers that could buy shares from or sell them to clients, without the need of an intermediary and trading stopped being conducted face-to-face on a market floor and was performed via computer and telephone from separate dealing rooms. In 1997 a computerized dealing system called the Stock Exchange Automated Quotation was introduced. In 2007 the London Stock Exchange merged with Borsa Italiana, creating Europe's leading equity platform.
The New York Stock Exchange
The New York Stock Exchange's history dates back to 1792, when 24 brokers subscribed an agreement, forming the first organised stock market in New York. Now its based in Wall Street and was opened in 1922. One of the worst moments of the New York stock Exchange, was the Great crash which took place in October 1929. Since 2007 all New York Stock Exchange can be traded using its electronic Hybrid market. More than 50% of all orders are now delivered electronically.