The Amsterdam stock exchange is considered the oldest "modern" securities market in the world. when equities began trading on a regular basis as a secondary market to trade its shares. Prior to that, the market existed primarily for the exchange of commodities. In 1602, the
States General of the Netherlands granted the VOC a 21-year charter over all Dutch trade in Asia and quasi-governmental powers. The monopolistic terms of the charter effectively granted the VOC complete authority over trade defenses, war armaments, and political endeavors in Asia. The high level of risk associated with trade in Asia gave the VOC its private ownership structure. Following in the footsteps of the English
East India Company, stock in the corporation was sold to a large pool of interested investors, who in turn received a guarantee of some future share of profits. In the Amsterdam
East India House alone, 1,143 investors subscribed for over ƒ3,679,915. from the Dutch East India Company, dating from 7 November 1623, for the amount of 2,400
florins Although it is considered by some to be the first modern stock market, there were limited markets for something similar to shares in Venice, Florence, Genoa, Germany, or Spain several centuries earlier. {{blockquote| It is not quite accurate to call [Amsterdam] the first stock market, as people often do. State loan stocks had been negotiable at a very early date in Venice, in Florence before 1328, and in Genoa, where there was an active market in the luoghi and paghe of Casa di San Giorgio, not to mention the Kuxen shares in the German mines which were quoted as early as the fifteenth century at the Leipzig fairs, the Spanish juros, the French rentes sur l'Hotel de Ville (municipal stocks) (1522) or the stock market in the Hanseatic towns from the fifteenth century. The statutes of Verona in 1318 confirm the existence of the settlement or forward market ... In 1428, the jurist Bartolomeo de Bosco protested against the sale of forward loca in Genoa. All evidence points to the Mediterranean as the cradle of the stock market. But what was new in Amsterdam was the volume, the fluidity of the market and publicity it received, and the speculative freedom of transactions. The subscription terms of each stock purchase offered shareholders the option to transfer their shares to a third party. Quickly a secondary market arose in the East India House for resale of this stock through the official bookkeeper. After an agreement had been reached between the two parties, the shares were then transferred from seller to buyer in the "capital book". These "fixed" capital stock transactions amassed huge turnover rates, and made the stock exchange vastly more important. The voyage to the precious resources in the West Indies was risky. Threats of
pirates, disease, misfortune, shipwreck, and various
macroeconomic factors heightened the risk factor and thus made the trip wildly expensive. So, the stock issuance made possible the spreading of risk and dividends across a pool of investors. Should something go wrong on the voyage, risk was mitigated and dispersed throughout the pool and investors all suffered just a fraction of the total expense of the voyage. The system of privatizing national expeditions was not new to Europe, but the fixed stock structure of the East India Company made it one of a kind. In the decade preceding the formation of the VOC, adventurous Dutch
merchants had used a similar method of "private partnership" to finance expensive voyages to the
East Indies for their personal gain. The ambitious merchants pooled money together to create shipping partnerships for exploration of the East Indies. They assumed a joint-share of the necessary preparations (i.e., shipbuilding, stocking, navigation) in return for a joint-share of the profits. Experienced traders on the inside circle of these trading clubs had a slight advantage over everyone else, and the prevalence of these clubs played a major role in the continued growth of the stock exchange itself. Additionally, similarities can be drawn between modern day brokers and the experienced traders of the trading clubs. The network of traders allowed for organized movement of knowledge and quick execution of transactions. Thus, the secondary market for VOC shares became extremely efficient, and trading clubs played no small part. Brokers took a small fee in exchange for a guarantee that the paperwork would be appropriately filed and a "buyer" or "seller" would be found. Throughout the 17th century, investors increasingly sought experienced brokers to seek information about a potential counterparty. The European Options Exchange (EOE) was founded in 1978 in Amsterdam as a
futures and
options exchange. In 1983, it started a
stock market index, called the EOE index, consisting of the 25 largest companies that trade on the stock exchange.
Forward contracts, options, and other sophisticated instruments were traded on the Amsterdam Stock Exchange well before this. In 1997, the Amsterdam Stock Exchange and the EOE merged, and its blue chip index was renamed
AEX, for "Amsterdam EXchange". It is now managed by Euronext Amsterdam. On 3 October 2011,
Princess Máxima opened the new trading floor of the Amsterdam Stock Exchange. The former Stock Exchange building was the
Beurs van Berlage.
Buildings 1608-11 on The Rokin The Amsterdam Bourse, an open-air venue, was created as a commodity exchange in 1530 and rebuilt in 1608. The city of Amsterdam had decided, that it deserved a proper building for the stock exchange. Rather than being a
bazaar where goods were traded intermittently, exchanges had the advantage of being a regularly meeting market, which enabled traders to become more specialized and engage in more complicated transactions. Its proximity to the harbor and incoming mail made it a sensible location for traders to be the first to get the latest commercial news. Trading also flourished in the 'church square' near the
Oude Kerk. The city of Amsterdam then ordered the construction of an exchange in
Dam Square. It was built by Hendrick de Keyser and opened for business in 1611. Various sections of the building were marked for commodity trading and VOC securities. The
Dutch East India Company (abbreviated VOC) introduced risk management innovations motivated by
international trade and
venture capital (VC).
Limited liability and
equity shares were pioneered at the Amsterdam stock exchange. A bylaw on trade in the city of Amsterdam dictated that trade could only take place in the exchange on weekdays from 11 a.m. to noon. While only a short amount of time for trading inside the building, the window created a flurry of investors that in turn made it easier for buyers to find sellers and vice versa. Thus, the building of the stock exchange led to a vast expansion of liquidity in the marketplace. In addition, trading was continued in other buildings, outside of the trading hours of the exchange, such as the trading clubs, and was not prohibited in hours outside of those outlined in the bylaw. The location of exchange relative to the East India House was also strategic. Its proximity gave investors the luxury of walking a short distance to both register the transaction in the official books of the VOC, and complete the money transfer in the nearby Exchange Bank, also in Dam square. Jan David Zocher constructed a new building for the exchange near the Dam/Damrak. It opened in 1845 and was designed as a Greek temple with columns in front. Between 1896 and 1903 the large red brick
Beurs van Berlage on the Damrak was constructed. It became the building of the Amsterdam exchanges in 1903. Today it serves as a venue for concerts, exhibitions and conferences. In 1914 the stock exchange moved to a new building in Beursplein 5, next to the old building, where it remains today. == See also ==