When you think of world-leading stock exchanges in the 2020s, you likely name places like the London Stock Exchange (LSE), the New York Stock Exchange, the Tokyo Stock Exchange (TYO) and the Nasdaq. But do you ever add Euronext Amsterdam to that list?
If the answer is no, then perhaps you should given that it was the world’s first stock exchange and the world’s first true forex market.
The birth of the Amsterdam Stock Exchange
The Amsterdam Stock Exchange was officially founded in 1602, when it was used as a way for merchants from the East to trade spices with those in Europe. Because of the trade routes the Dutch developed, this was very lucrative for the country.
So, initially the exchange provided a way of trading commodities, but this evolved into the trading of stocks and equities, much of which is connected to the rise of the Dutch East India company.
This transformed into a securities market when the option for shareholders to transfer their share options to a third party enabled investors to start making speculative trades.
An explosive event
The Amsterdam stock exchange earned so much money for the Dutch that the Spanish attempted to blow up the building in which it was housed during the Eighty Years’ War. The Spanish were hoping to reduce the amount of money the Dutch were funnelling into their war effort.
So, in 1622, Spanish troops planted a boat filled with gunpowder under the building, which at that time stood on the arches over the Rokin canal. However, the Spanish plot was foiled when a young orphan boy discovered the boat and raised the alarm.
This led to a delightful Dutch tradition – Exchange Drumming Day – when children are invited to play the drums in the exchange building where the acoustics amplify the sound.
The boy who saved the Amsterdam Stock Exchange centuries ago was rewarded for his heroics with the chance to play the drums in the building alongside other orphans, which was his wish at the time.
Experimentation in Amsterdam
One of the reasons why the Amsterdam Stock Exchange is considered the first of its kind is that traders in the 17th century were able to explore different trading instruments – many of which have evolved into the trading instruments we use today.
Among the trades that took place at this time were futures trades (where wealthy Dutch families traded in commodity values), shares in joint-stock companies and currency exchange.
The widespread use of bills of exchange is what cemented the Amsterdam Stock Exchange as a hub for forex trading. In the early 17th century, the Amsterdam government introduced a law that restricted the use of bills of exchange to its newly created exchange bank.
This was the government’s attempt to regulate the sector, which was developed as a way of allowing a seller to provide credit to a buyer. In the 90-odd years following its establishment and the new rules relating to bills of exchange, deposits at Amsterdam’s exchange bank increased significantly.
As a result, the institution was able to manage significant deposits and transfers, as well as to settle international debts.
What about today?
Now known as Euronext, the Amsterdam Stock Exchange is still going strong today. In 2000, it merged with two other large European stock exchanges – the Brussels Stock Exchange and the Paris Stock Exchange – to form Euronext.
This is the largest pan-European equities market that allows traders to access a suite of services and products, including stocks, bonds, funds, stock options, index options and index futures. As a collective, Euronext has the deepest liquidity pool in Europe.
The liquidity of the market is important, because this is how easy it is to convert an asset or a security into cash.
If you’re interested in learning more about trading, and experimenting with trading instruments much like the early traders in Amsterdam did, a trading training programme is a great way to go. This will give you the opportunity to learn how to trade profitably, without the risk of losing considerable sums on live trades.
Stock and forex markets have evolved over centuries as a result of people experimenting to find new ways of trading and making money. Even though in today’s market there are set instruments you can use for trading, if you’re new to this world there is still a lot to learn.
By completing a training programme with a one step evaluation prop firm before you start making live trades, you maximise your chances of success in the forex market, while minimising your risk – it’s a win-win!