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A look at some major global stock exchanges
All stock exchanges share the same major objective of providing a platform where investors can buy and sell stock. However, each major stock exchange has its own unique characteristics and traits and a look at some of them will provide you with useful insights into the diversity of the global financial markets. There is no dearth of venues for executing practically any trade that you may wish to make.
The Tokyo Stock Exchange was found in 1878 and is one of the most influential stock markets. It uses electronic trading and the benchmark for tracking is the Tokyo Stock Price Index (TOPIX). The TOPIX is an index that is adjusted for free float and weighted by market capitalization and incorporates approximately 1700 domestic Japanese companies. These companies make up what is called the First Section and they are exclusively large cap companies. It has separate sections for mid-cap companies (roughly 450 companies) and for 200 companies that represent high-growth and emerging stocks.
The Hong Kong Stock Exchange was set up in 1891 and is one of the largest Asian stock exchanges. Trading is electronic and roughly 1450 companies are listed on this exchange. The performance benchmark is the Hong Kong Stock Exchange Hang Seng Index which is adjusted for free float and weighted by market capitalization. The index is made up of approximately 40 companies and is computed by a subsidiary of Hang Seng Bank and is available from 1969. The constituents of the index are divided for sub indices based on their business including finance, utilities and real estate. The index is also regarded as a surrogate for the Hong Kong economy and, because of the close links with China, there are many Chinese companies listed on the exchange.
The London Stock Exchange dates back to 1698 though it officially started operations in 1773. It is the largest stock exchange in Europe and arguably the most international offering the opportunity to buy stocks in more than 50 countries. Trading is electronic and the market benchmark is called the Financial Times Stock Exchange (FTSE) 100 Share Index, which is also affectionately known as the “Footsie.” it is made up of the hundred blue-chip stocks that trade on the exchange and, like most major exchanges, is adjusted to free float and weighted by market capitalization.
The New York Stock Exchange (NYSE) traces its existence back to 1792 and securities trading on commission was set up. This is the largest stock exchange in the world by market capitalization and the market capitalization of its listed companies is over $12 trillion. It is an interesting combination of the traditional open outcry exchanges and floor traders shouting orders blended with electronic execution of trades. Each stock that is listed has one or more specialists who oversee every aspect of trading in that stock. Orders can be placed with the specialist electronically or by shouting orders. The benchmark is tracked by the NYSE Composite Index which is made up of roughly 1650 US companies and around 350 foreign companies. This index is also adjusted for free float and weighted by market capitalization.