Tuesday, May 7, 2013

Stock Market Timeline

The history of stock market is very rich and the efficient system that you use now for trading and investing in companies has evolved over centuries. All the policies and regulations have evolved through time as and when the policy makers felt the need for them. Wall Street was laid out as early as in 1685. The investment market was born after a century in 1792 when five securities were traded. These included three government bonds and two bank stocks.

The Buttonwood Agreement was the historic pact that around twenty four brokers and merchants signed agreeing to trade securities for commission. It is said that the New York Stock Exchange began as a result of this pact. Slowly the market started gaining prominence and securities such as bank stocks, insurance stocks and government bonds had begun to trade. As the market gained prominence, the requirement of rules and regulations for the proper conduct of trading and investing was felt. The New York Stock & Exchange Board was formed at wall street. In 1853, the board required the companies which were listed on the exchange to produce complete statements of shares outstanding and capital resources.

The first stock market crash happened in 1853 when the market lost up to 45% of value. The reason was the collapse of the Ohio Life Insurance & Trust Company. In 1866, the first transatlantic cable was laid which enabled instant communication between New York and London. In 1867, the first stock ticker was invented and this brought the current prices of the companies to all the investors. In 1872, the specialist was created. The specialist is a trader who trades only in one stock because of which he sits in one location on the trading floor. In 1895, it was suggested that companies start providing annual reports of their performance to their shareholders. Then in the subsequent year, there was another development in the form of the wall street journal publishing the Dow Jones Industrial average for the first time.

The Federal Reserve System was created in 1913 to bring structure to the control credit and to structure the banking system. The market price was quoted as a percentage of the par value. This was changed to prices quoted in dollars. In 1929 the largest crash in terms of the volume of shares takes place. This marked the beginning of the great depression. The Dow Jones reached the lowest value from its 1929 peak in 1932. It was quoting 89% down at that point of time. The Securities and Exchange Commission is established to provide full disclosure to investors and to prevent fraudulent activities in connection with the sale of securities. Women enter the trading floor in 1943 ending the reign of men. In 1966, several important developments took place. The Securities Investment Protection Corporation was set up to provide protection to the clients of brokerage firms that collapse. The New York futures exchange was formed in 1979. In 1996, real time tickers were launched in CNBC and CNN thus bringing the stock prices to investors and traders instantly.

As you can see, the rich history is incomparable to the history of any other stock market in the world. NYSE is the biggest stock exchange in the world and it will continue to remain so for some time to come.

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