Individuals and businesses have traded goods since the beginning of civilization. But the idea of a stock market—a market in which businesses offer ownership stakes to investors to raise money—is a more recent development.

Today, many trillions of dollars in ownership stakes—referred to as shares or stock—trade hands every year on the world’s equity exchanges. While today’s stock markets are mostly operated by computers and shares are traded electronically, exchanges were historically places where brokers, traders, investors and speculators met in person to swap paper certificates representing ownership shares in publicly owned companies.

Stock markets operate all over the world, serving not only as marketplaces for equities, but also as a mirror for the concerns and hopes of investors and society at large.

When was the U.S. stock market created?

The Philadelphia Stock Exchange was the first stock exchange in the U.S, founded in 1790. It was instrumental in the development of the country’s financial industry and in financing westward expansion. In 1792, a group of traders that had been meeting in New York signed the Buttonwood Tree Agreement, setting the term for buying and selling stocks and bonds. In 1817, the group renamed itself the New York Stock and Exchange Board and moved into 40 Wall Street.

In the 1970s, a group of brokerages began trading electronically on the National Association of Securities Dealers Automated Quotations, or the Nasdaq. It joined the International Stock Exchange in 1992 and in 1998 merged with the American Stock Exchange. Today, the Nasdaq is the second biggest stock market in the world by market cap, after the NYSE.

History of the stock market

In the Middle Ages, merchants and traders would congregate in town squares to exchange goods. Since merchants often came from different countries to trade, early bankers established money exchanges so foreign buyers could do transactions in the local currency. Early European lenders operating in the 1300s traded debt and bought and sold government debt issues.

In 1531, the first formal exchange was established in Antwerp, Belgium, where brokers and lenders could meet to exchange promissory notes and bonds (but not individual stocks). The first modern stock was issued in Amsterdam by the Dutch East India Company, which sold ownership stakes in the company to finance the voyages of its merchant ships competing for exports in the spice and slave trade.

In 1611, the Amsterdam stock exchange was created, trading in stocks of the Dutch East India Company. In following years, similar companies began issuing stock, and investors began buying stock without doing due diligence into companies. This created market instability and a market crash in 1720. Another crash at the same time, the South Sea Bubble—the inflation and collapse of stock in the South Sea Company—showed investors the perils of taking on risk. But the idea of trading stocks had taken hold. 

History of the stock market timeline

Here are some of the important dates in the development of stock markets: 

1531:

The first formal market is established, in Antwerp, Belgium, allowing brokers and lenders to meet and exchange promissory notes and bonds.

1611:

The first stock trades hands, issued by the Dutch East India Company on the Amsterdam Stock Exchange. This idea is so attractive to investors that other maritime companies in Portugal, Spain, and France begin issuing stock, which aids the expansion of their colonial enterprises. 

1773:

The idea of trading stock makes its way to London, and stock traders begin exchanging shares in a coffeehouse. The London Stock Exchange is founded in 1801. 

1790:

The Philadelphia Stock Exchange opens, which assists in financing the U.S.’s expansion west.

1792:

Traders in New York City sign the Buttonwood Tree Agreement This is formalized as the New York Stock Exchange, on Wall Street, in 1817.

1878:

The Tokyo Stock Exchange opens to provide a market for government bonds issued to former samurai. It is now the third-largest market in the world.

1896:

The Dow Jones Industrial Average, the first price-weighted stock market index of industrial companies on the stock exchanges in the United States, opens. Among its components are oil companies, utilities, lead and rubber suppliers, and railroads.

1923:

An early version of the Standard & Poor’s 500, an index created by Poor’s Publishing, is created, which begins tracking 90 stocks in 1926. It becomes the S&P 500 in 1957 when it begins tracking the value of 500 corporations that have stocks listed on the NYSE (and now also the Nasdaq). Its components are chosen to represent the overall U.S. economy.

‍1929: After a decade of speculation, when average investors were readily able for the first time to buy and sell shares, the stock market crashes on Oct. 29, a day dubbed Black Thursday. The plunge in prices is widely blamed for setting off the Great Depression. 

1971:

Trading begins on the Nasdaq exchange, which is operated by the National Association of Securities Dealers Automated Quotations (also known as Nasdaq). It is the first electronic stock market.

2000:

Euronext is founded as a blend of the Amsterdam Stock Exchange, Brussels Stock Exchange, and Paris Bourse after the European Union is formed. It becomes the largest center for debt and funds listings, and becomes the fifth-largest stock exchange by market cap.

‍2007: The New York Stock Exchange merges with Euronext, forming NYSE Euronext.

‍2013: The NYSE is acquired by Intercontinental Exchange (ICE), which subsequently spins off Euronext.

The world’s largest stock markets  

Major cities around the world now have exchanges that trade domestic and international stocks. The world’s largest stock exchange by market capitalization is the New York Stock Exchange. In fact, NYSE’s market cap exceeds that of Tokyo, London, and the Nasdaq combined.

Here are the world’s 10 largest stock exchanges by market cap:

1. New York Stock Exchange (NYSE)

2. NASDAQ

3. Tokyo Stock Exchange

4. London Stock Exchange Group

5. Euronext

6. Hong Kong Stock Exchange

7. Shanghai Stock Exchange

8. Toronto Stock Exchange

9. Frankfurt Stock Exchange

10.  Australian Securities Exchange

What the future holds

Although the New York Stock Exchange is the world’s biggest exchange based on the market value of the shares traded there, the NYSE is a subsidiary of a larger company, Intercontinental Exchange (ICE). ICE started as a platform for trading energy and power, but expanded by acquiring equity exchanges. Nasdaq also is the result of a number of mergers between different exchanges. Antitrust regulators have opposed some of the plans among exchanges to merge. But as the economy becomes increasingly global, there may be more attempts among exchanges to combine.

The bottom line

The world’s stock markets serve as a clearinghouse for investors to come together to buy and sell shares in publicly traded companies. The ability of companies to raise capital on exchanges has financed all sorts of development, from exploration of the Americas to the western expansion of the U.S. Stock exchanges also serve as a useful barometer of a society’s fears and hopes.  

As global economies have grown, so have markets dedicated to exchanging securities. Over time, as world economies merge, so have some of their exchanges. What was once a fragmented industry, with each major financial center having its own exchange where people came together to trade, has undergone rounds of mergers as exchanges have made the transition to electronic trading.

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