Origin, Meaning, Definition of Stock Exchange

Stock Exchange – Origin, Meaning, Definition

Origin of Stock Exchange

Amsterdam Stock Exchange is considered as the oldest stock exchange in the world. It was established in the year 1602 by Dutch East India company called VerenigdeOost-IndischeCompagnie called ‘VOC’. It was later rechristended as “Amsterdam Bourse”. The first stock exchange in India was“The Native Shares and Stock Brokers Association”. It was recognized by Government of India on Aug 31, 1957 under Securities Contract (Regulation) Act, 1956. It became The Bombay Stock Exchange subsequently.

Meaning of Stock Exchange

Stock exchange is an organized market for buying and selling corporate and other securities. Here, securities are purchased and sold out as per certain well-defined rules and regulations. It provides a convenient and secured mechanism or platform for transactions in different securities. Such securities include shares and debentures issued by public companies which are duly listed at the stock exchange, and bonds and debentures issued by government, public corporations and municipal and port trust bodies.

Stock exchanges are indispensable for the smooth and orderly functioning of corporate sector in a free market economy. A stock exchange need not be treated as a place for speculation or a gambling den. It should act as a place for safe and profitable investment, for this, effective control on the working of stock exchange is necessary. This will avoid misuse of this platform for excessive speculation, scams and other undesirable and anti-social activities.

London stock exchange (LSE) is the most popular stock exchange in the world. While Bombay stock exchange (BSE) is the oldest stock exchange in India. Similar Stock exchanges exist and operate in other parts of the world. (Tokyo Stock Exchange, Bankgaco Stock Exchange, Singapore Stock Exchange, Dubai Stock Exchange, Newyork Stock Exchange)

Definition of Stock Exchange

According to Hastings, "Stock exchange or securities market comprises all the places where buyers and sellers of stocks and bonds or their representatives undertake transactions involving the sale of securities.”

According to Husband and Dockerary, "Stock exchanges are privately organized markets which are used to facilitate trading in securities."

The Indian Securities Contracts (Regulation) Act of 1956, defines Stock Exchange as,"An association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities."