Chapter 1 – A brief History of Share Market
Updated: Apr 10, 2021
The stock markets are one of the most important parts of today’s global economy. Most countries are depending on their stock market for more than 60% of their GDP (Gross Domestic Product). The stock market is a good place to make money.
India is also one of the countries where the stock market contribution is huge in the country’s overall growth. That’s why it is considered the fast-growing market in the world.
There is a very rich history of the stock market. We know that before going to the basics of stock market; let’s look at the past first. Here are the step-by-step events happened in the past that led to the development of the stock market.
This is not about the Wall Street or Bombay Stock Exchange. This is Amsterdam, the Amsterdam in the early 1600s - more than four centuries ago. The Dutch East India Company (founded in the year 1602), also known as VOC, became the first company in history to issue shares and bonds in public.
In the earlier 1602s, The Dutch started the concept of the share market as there were no reliable businesses that will make them money. They started to use the papers shares to do the buying and selling of their shares with other shareholders. Firstly, it was not listed on any of the exchanges. But with the increasing volume of shares, it became necessary to make a place to exchange shares.
After that, the first stock exchange was created in Amsterdam which name was Amsterdam Stock Exchange. For a very long period, VOC was the only publicly-traded company on the exchange.
This was the turning point in the history of the Stock Market. They changed the way business was done.
Now go back to the 18th century when East India Company began trading in securities. There is one interesting story. The stock market in India started under a banyan tree opposite the Town Hall of Bombay.
Yes, you heard it right, a banyan tree. A majestic tree in Mumbai has something to do with the history of the Indian Stock Market. It started back in the 1850s when 22 stockbrokers began trading under the banyan tree. This particular banyan tree witnessed the evaluation of the stock market in India. They used to trade in cotton but a little bit they know how these activities are going to transform the crores of Indian people in the future.
It was not until the 1990s that the Indian stock market started to take shape. To bring out more transparency in the share market, the Government of India incorporated National Stock Exchange (NSE) in the year 1992. After that, the paper-based settlement was replaced by electronic depository-based accounts, and settlement of trades was always done on time.
So in conclusion, the purpose of this article is to deal with our past during the 17th century and the early 1900s. The history of the stock market is very fascinating. It changes the perspective of the country and changes the whole world that we are witnessing today. And yes, as per the expectations of our ancestors, India has emerged as a successful investment destination with a bright future.