Stock exchanges play a pivotal role in the global economy so size does matter. Today we will discuss the largest stock exchanges in the world.
You might have definitely heard about various stock exchanges present across the globe, however, very few are known in the global business.
Stock markets play a vital role in the world economy as it helps companies raise capital by issuing shares, bonds to investors for business expansion, working capital needs, capital expenditure, etc.
A Brief Introduction on Stock Markets
Before getting into the main topic of knowing the most important and the largest stock markets in the world, let us first understand what is a stock market, more popularly known as Stock Exchange.
What is a Stock Exchange?
Stock Exchange also known as the share market is an organization that allows a person or company to buy and sell securities. Securities can be shares of stock, bonds issued by a company or sovereign, and different financial instruments in a public venue.
Stock Exchanges give membership to designated stockbrokers and members who act as intermediaries for buying and selling securities. Stock exchange ensures compliance of fair trade policies and compliance related to transaction activities themselves. Stock exchanges have different indices which act as a barometer of the health of the economy.
These days almost all stock exchanges exist as electronic marketplaces. The market price of the underlying shares of the company and different commodities like oil, gold, copper, etc. depends on the demand and supply situation in the market as buyers and sellers place their respective orders for execution.
History of the Stock Exchange
The oldest and first stock exchange was established more than 400 years ago in Europe, Netherlands. Dutch East India shares were used to trade on the exchange.
Top 10 Stock Exchanges in the World
A stock exchange’s primary responsibility is to ensure there is adequate liquidity in the market. The larger the stock exchange, the better it is for all stakeholders.
There are approximately 60 major stock exchanges in the world.
We have compiled a list of the 10 largest stock exchanges in the world based on the market capitalization data provided by the World Federation of Exchanges.
1. New York Stock Exchange (NYSE)
NYSE is the biggest stock exchange in the world which is located at 11, Wall Street, New York City, USA. NYSE has 2400 listed companies which include many blue-chip companies like Walmart, Berkshire Hathaway Inc, J.P. Morgan Chase, etc.
NYSE is one of the oldest stock exchanges which was founded in the year 1792. The market cap of all listed companies on NYSE is approximately $22.9 trillion as of 2021.
The daily average trading volume is anywhere between 2 to 6 billion shares. NYSE is the only stock exchange in the US that provides floor trading to important dealers.
NYSE offers trading in various financial instruments like exchange-traded funds (ETF’s), Equities, Bonds, and several other options.
NASDAQ, which stands for National Association of Securities Dealers Automated Quotations is the second-biggest stock exchange in the world.
NASDAQ is based at 151 W, 42nd Street, New York City. NASDAQ was instituted in 1971. It is the first electronically traded stock market all across the world with a total market cap of $10.8 trillion.
More than 3000 stocks are listed on NASDAQ with an average trading value of $1.26 trillion every month. Big technology heavy-weight companies like Microsoft, Google, Facebook, Tesla, Amazon, Apple, etc. are listed on this exchange. NASDAQ listed companies contribute 9% of the total market value of the world.
There is an interesting fact about the NASDAQ stock exchange which you will be surprised to know that it has no company listed from the oil and gas sector or utility sector as the exchange is more inclined towards Technology, Healthcare, and Consumer services sector.
3. Tokyo Stock Exchange (TSE)
Tokyo Stock Exchange which is also known as Tosho is the third biggest stock exchange in the world located in Tokyo, Japan. TSE was established in 1878.
TSE has more than 3500 companies listed whose cumulative market capitalization is more than $5 trillion. Nikkei 225, is the benchmark index that constitutes 225 Japanese business conglomerates like Honda, Toyota, Suzuki, Sony, Mitsubishi, and many others.
You will be astonished to know that TSE has suspended its operations completely for 4 years after World War II. TSE allows members to trade in Derivatives, Global Equities, Bonds, etc.
TSE has more than 1000 employees on its payroll and it is best known for providing trading compliance and market surveillance.
4. Shanghai Stock Exchange (SSE)
Shanghai Stock Exchange is the fourth-largest in the world and the biggest stock exchange in Asia, located in Shanghai, China. It was founded in the year 1866 however it was adjourned in 1949 due to the Chinese revolution and its modern foundations were laid in 1990.
SSE has more than 1450 public limited companies listed on its platform whose combined market capitalization is around $4 trillion.
SSE is a little different when compared to its counterparts like NYSE, NASDAQ where market regulators impose circuit breakers to curb price volatility. Whenever there is adverse news or uncertainty Chinese government holds the right to stop trading for the day.
Euronext, considered to be the best stock exchange in Europe is the fifth largest stock exchange in the world which is located in Amsterdam, Netherlands.
Euronext has more than 1300 companies listed on its platform with a total market capitalization of more than $4.2 trillion.
Its benchmark indices are AEX-INDEX, the PSI-20, and the CAC 40. The total monthly average volume is approximately $174 billion.
6. Hong Kong Stock Exchange (HKSE)
Hong Kong Stock Exchange which was founded in the year 1891, is ranked sixth in the list of the world’s largest stock exchanges.
HKSE benchmark index is the Hang Seng Index. There are 1200 total debt securities and more than 2300 companies listed on HKSE out of which around 50% of them are from mainland China.
The total market capitalization of all listed HKSE stocks is more than 4 trillion. HKSE generates a trading volume of more than 1 million derivatives contracts per day with HSCEI futures.
In the year 2017, HKSE transitioned from the physical trading process into electronic trading. Many big business conglomerates like HSBC Holdings, AIA, Tencent Holdings, China Mobile, etc. are listed on HKSE.
7. London Stock Exchange (LSE)
London stock exchange which is one of the oldest stock exchanges in the world is owned and administered by the London Stock Exchange Group. LSE, which was established in 1698 ranks seventh in the list of the world’s largest stock exchanges.
There are approximately 3000 companies listed under the London Stock Exchange with a combined market capitalization of more than 3.7 trillion dollars.
LSE was the world’s largest stock exchange until the occurrence of World War I. Later NYSE toppled LSE to become the world’s biggest stock exchange after the end of world war I.
Many big prominent British companies like Barclays, British Petroleum, Vodafone, GlaxoSmithKline among others are listed on LSE.
8. Shenzhen Stock Exchange
Shenzhen stock exchange is located in Shenzhen which is popularly known as Silicon Valley of China. Shenzhen is the second stock exchange in China along with Shanghai Stock Exchange which was established on December 1, 1990.
Shenzhen is the eighth largest stock exchange in the world. Shenzhen has more than 1400 companies listed on its platform with a total market capitalization value of approximately $3.92 trillion.
Most of the companies listed on this exchange are based in China and all the trades shares are in Yuan currency. As most of the listed companies are China-based Chinese government has all the authority to stop trading for the day if there is any adverse news or event impacting stocks. China has two sets of shares available for investors and traders
a) A-shares which are traded in local currency Yuan and
b) B-shares which are trades in U.S. dollars for foreign investors
9. Toronto Stock Exchange
Toronto Stock Exchange is owned and operated by the TMX group. TSE was established in 1852 and is located in Toronto, Canada. TSE has around 2200 listed companies with a total market capitalization of $2.1 trillion.
Multiple financial instruments like Real estate investment trusts, Stocks, Bonds, Commodities, ETF’s, etc. are traded on Toronto Stock Exchange whose average monthly trading volume is $97 billion.
TSE was recently in the news to merge itself with the London Stock exchange however the deal did not go through as shareholders rejected the proposal.
10. BSE (Bombay Stock Exchange)
Bombay Stock Exchange, the oldest stock exchange, established in 1875 in Asia is the 10th largest stock exchange in the world. BSE located at Dalal Street, Mumbai has more than 5500 listed on its platform. BSE’s total market capitalization is greater than $2 trillion.
BSE is home to the S&P BSE SENSEX benchmark index which is the acronym for sensitive index. Sensex is comprised of 30 stocks representing different sectors of the economy.
Many blue-chip companies like Reliance Industries, Tata Consultancy Services, Infosys, HDFC Bank, ICICI Bank, Tata steel are constituents of the BSE SENSEX index.
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