Two of the world's big stock exchanges began as brokers huddled under trees
In 1792, 24 New York brokers signed a pact beneath a buttonwood tree to trade five securities. Half a world away in the 1850s, five Bombay dealers gathered under a banyan outside the Town Hall. Before glass towers and trading screens, markets needed little more than shade, trust and somewhere to meet.
The habit of trading debts is older still. In the 14th century Venetian lenders carried slates listing issues for sale and met clients much as brokers do now, swapping risky loans among themselves and eventually selling government debt to individual investors. Italian city-states went on to pioneer tradable bonds. By 1688 the Amsterdam merchant Joseph de la Vega had written Confusion of Confusions, the earliest book on how a stock market works, framed as a conversation between a merchant, a shareholder and a philosopher.
London's first brokers were reportedly thrown out of the Royal Exchange for bad manners and set up in the coffee houses of Exchange Alley. By 1698 John Castaing at Jonathan's Coffee House was posting regular price lists, the seed of the London Stock Exchange. Then came mania. Around 1720 investors poured money into the South Sea Company and John Law's Mississippi Company, and one promoter floated a venture whose purpose nobody was to know. Prices collapsed that same year, Parliament passed the Bubble Act, and Law fled France.
Bombay's brokers kept moving as their numbers grew, from the Town Hall banyan to other shady junctions, until they settled on a permanent spot in 1874. Premchand Roychand's group became an official association in 1875, moved to a site near Horniman Circle in 1930, and gave its street the name Dalal Street, meaning Broker Street. In 1957 it became the first exchange recognised by the Indian government, and in 1995 it swapped shouting on the floor for screens in just 50 days.
The core job has not changed. An exchange lists securities, lets companies raise money by selling shares in the primary market, and lets investors trade them afterwards in the secondary market.
Source: Stock exchange
