How the Stock Market Began

The problem from the last lesson, an owner whose money is locked inside a business, is more than four hundred years old. In 1602 the Dutch East India Company, the VOC, asked the public to share the cost and the risk of trading voyages to Asia that would take years. In Amsterdam alone 1143: show the note on People who bought in, Amsterdam, 1602 people signed up. Counting the shares sold in other Dutch cities too, the company raised about 6.4 million guilders in all, the Dutch money of the day: money it kept working in ships and trade instead of handing it back.

Its owners took the same way out as Maya's investor: they sold to each other. The company's charter, its founding document, let a share pass to a new owner through the company's bookkeeper: once buyer and seller agreed, the bookkeeper wrote the buyer's name in the company's books. So buyers and sellers met in the street and on Amsterdam's New Bridge, and from 1611: show the note on Amsterdam's exchange building in an exchange building of their own. VOC shares became the first to trade freely, day after day.

The road below starts even earlier, in Bruges and Antwerp. Merchants there already met to trade goods and bills of exchange (written orders to pay money later, often in another city), but not shares. The word bourse, another name for an exchange, is usually traced to an inn in Bruges, and Antwerp opened a building just for trading in 1531.

Look at what each step on the road added. A crowd in one spot meant a seller no longer had to hunt for buyers one by one, the problem of the 1000 owners in the last lesson. A building of their own, like Amsterdam's exchange of 1611, gave that crowd a fixed home off the street, so buyers and sellers knew where to find each other every day. A price list, like the one John Castaing published from Jonathan's Coffee House in London in 1698, let anyone see what shares were selling for. Rules, like the Buttonwood Agreement that 24 New York brokers signed on 17 May 1792, set common terms for how the signers would deal with each other, so each of them knew how a deal among them would be done. Bombay's brokers took the same road: first a crowd under a banyan tree in the 1850s, then rules of their own in an association formed on 9 July 1875: show the note on Bombay's brokers form an association, the start of today's BSE (Bombay Stock Exchange), Asia's oldest stock exchange.

Owners who want money still sell to people who want to own, as they did under the banyan tree. How it is done has changed almost completely: for more than a century after 1875, every trade was struck by brokers meeting in person.

Until the mid-1990s, buying a share meant calling a broker, who shouted your order across a crowded trading ring, the floor where brokers bought and sold face to face. After the trade came the paper, as the last lesson showed: the certificate and a signed transfer form went by post to the company, which recorded the new owner. That took weeks, and certificates were lost, torn or forged on the way.

From the late 1980s, the market was rebuilt step by step. India's market regulator, the Securities and Exchange Board of India (SEBI), which writes the market's rules and enforces them, was set up in 1988 and gained legal powers in 1992. A new exchange, the National Stock Exchange (NSE), began India's first nationwide trading on screens in November 1994, and BSE's ring fell silent when it moved to screens in 1995. From 1996: show the note on Paper becomes electronic, shares could be held electronically in a demat account instead of on paper. And since 27 January 2023, every Indian share trade has settled by default on the next working day, called T+1, T being the day of the trade. The road below follows each step.

The result is a market no banyan tree could hold. At the end of September 2026, India had about 24 crore: show the note on Demat accounts, Sep 2026 (240 million) demat accounts. But one person can hold more than one account, so count the people too: NSE counted about 13.5 crore: show the note on Unique investors on NSE (135 million) unique investors on 31 August 2026, each counted once by their tax ID, the PAN. Today a student in Kochi and a fund manager in Mumbai trade in the same market and see the same prices. What that market is made of, and who runs each part of it, is where the next lesson begins.