
The World’s Best Stock Exchanges
Most people understand that the stock exchange is a marketplace where people trade stocks. That is true. However, the two best stock exchanges are so much more and have very different ways of functioning.
A stock exchange is indeed a central marketplace where investors, brokers and sellers, trade. But what happens specifically? What exactly is the function of the stock exchange? More specifically, it is a central marketplace where corporations and financial organizations convene to provide services to the buyers and sellers of stocks, bonds, derivatives and other financial products.
So, the stock exchange, while it is a trading space for companies, is also a company with its own financial employees. It is highly regulated by the government because the government has a big stake in what happens. Therefore, stock exchanges can and are used as speculative gauge indicating a country’s economic state. If money is moving on the exchange and stocks are doing well, the country is also usually doing quite well economically. If stocks fall suddenly, not a dip in numbers for one company, but for all stocks on the exchange, then the public is in some sort of holding pattern, usually an indicator of an economic crisis on the horizon.
Below are two of the world’s best stock exchanges. It’s important to know more about why they are considered the best, and how they function. Knowledge is power when it comes to investing.
The New York Stock Exchange
The biggest stock exchange in the world, is the New York Stock Exchange, also known as the NYSE. The NYSE estimates that a third of all equities traded globally, are traded on the NYSE. To give some indication of just how much money is moving on the NYSE and how valuable it is, the market cap of the NYSE presently, is at $19 trillion. To give some context to that value, the three next largest stock exchanges only add up to $16 trillion.
The NYSE functions like a true buyers’ and sellers’ marketplace, literally. If you were to take a tour, you would overhear people actively trading on their phones, some in a calm voice, others shouting in full panic. One signature of the NYSE is at the opening and closing of the marketplace, the bell is rung traditionally, signaling the start or the end of the trading day.
NASDAQ
The second largest stock exchange, also in the United States, is the NASDAQ. However, geo-location is about the only thing they have in common in terms of function. Unlike the NYSE, the NASDAQ does not feel at all like a marketplace. It is located inside a communications tower. So, instead of traders buying and selling loudly on their phones, you are more likely to see engineers and IT workers. The trading here takes place directly with buyers and sellers and via market makers. The NASDAQ functions this way because it is a more modern trading space, geared toward high tech companies while the NYSE is known more for the blue-chip stocks and more established companies with proven and lengthy track records. But both exchanges are considered two of the best in the world.