Top 10 Largest Stocks Exchanges in the World

A stock exchange is a venue for stockbrokers, traders, buyers, and sellers to trade securities. Thousands of companies are listed on the leading exchanges. These businesses sell their stock shares, allowing the general public to invest in them.

Intro 

You may have heard of several stock exchanges worldwide, but just a few are well known in the global corporate world.

Stock markets are important in the global economy because they allow corporations to raise capital by issuing shares and bonds to investors for corporate expansion, working capital, and capital expenditure.

During this time, the entire market is alive with activity. Because many people rely on the stock market for their livelihood, either directly or indirectly, they are critical to a country's financial well-being.

Traders and stockbrokers use a stock exchange to buy and sell assets such as stocks, mutual funds, exchange-traded funds, bonds, derivatives, and other financial instruments. Around 60 stock exchanges exist worldwide, Around 60 stock exchanges exist worldwide, with thousands of listed companies on the majority of them.

Almost every one of these stock exchanges is run electronically. These exchanges provide the platform that many corporations throughout the world require in order to allow the general public to invest in them. Stock exchanges list companies from all industries, from agriculture to information technology. 

What is a stock exchange?

A stock exchange is a venue where you can buy and sell stocks, bonds, and other securities. Securities include stock, corporate or governmental bonds, and various financial instruments traded on a public exchange.

Stock exchanges can be used to assess the health of a country's economy as well as a leading indication of global economic strength. Rising financial market values translate into more significant living standards and employment rates.

Historically, stock exchanges were physical structures in each country of operation, but as electronic trading has become more prevalent, many have shuttered their trading floors and shifted to online platforms. On the other hand, the institutions have survived, and some are now larger than ever, with market capitalizations in the trillions of dollars.

Stock exchanges admit designated stockbrokers and members who act as brokers in purchasing and selling securities. The stock exchange ensures that fair trading policies are followed as well as compliance with transaction activity. Different indexes are used on stock exchanges to gauge the economy's health.

Almost all stock exchanges now operate as electronic markets. Orders are executed by buyers and sellers, and orders are executed by buyers and sellers, and orders are executed by buyers and sellers, and the market price of the company's underlying shares and different commodities such as oil, gold, and copper are determined by the demand and supply conditions in the market.

How do Stock Exchanges Work?

If the prospect of investing in stocks makes you nervous, you are not alone. Individuals with little or no financial knowledge are either horrified by reports of regular investors losing 50% of their portfolio value or seduced by "hot recommendations" that promise great rewards but rarely deliver. It's no surprise that the investment pendulum is considered to swing back and forth between fear and greed.

The truth is that investing in the stock market is risky, but when done correctly, it may be one of the most efficient methods to increase one's net worth. While the normal person retains most of their wealth in their home, the wealthy and extremely wealthy invest the majority of their fortune in inequities. Let's start with the definition of a stock and its various types in order to comprehend the stock market's mechanics.

Investing in Stocks

Several studies have shown that equity investments have outperformed all other asset classes over a long period of time. Stock returns are a result of capital gains and dividends. 

You have a capital gain when you sell a stock for a higher price than when you bought it. An organization's profits are distributed as dividends to shareholders. Shareholders receive a large part of the company's returns through dividends. Around a third of total equity returns have come from them since 1956, Around a third of total equity returns have come from them since 1956, accounting for the other two-thirds of capital gains.

While the prospect of buying a stock like Meta (AAPL), Apple (AMZN), Amazon (AMZN), Netflix (NFLX), and Google parent Alphabet (GOOGL) at an early stage is attractive, home runs are rare.

Risk-averse investors should have a higher risk tolerance when it comes to their stock portfolios. The majority of these investors' profits will come from capital gains rather than dividends. On the other side, conservative investors who require income from their portfolios may choose stocks with a long history of providing significant dividends.

Top 10 Largest Stock Exchanges in the World

1. NASDAQ

The NASDAQ's largest stock exchange, which is located in Times Square, is also in New York. The company was founded in 1971 by a group of local stockbrokers called the National Association of Securities Dealers Automated Quotations. The NASDAQ is unique in that it has never used an open outcry method, instead opting for a computer and telephone-based trading system, making it the first electronic stock exchange.

In March 2018, the NASDAQ had a market capitalization of $10.93 trillion, making it the second-largest stock exchange in the world. However, it has the most significant market capitalization of technology equities, with Apple (APPL), Microsoft (MSFT), Facebook (FB), and Tesla (TSLA) among its top listed businesses (TSLA). The Nasdaq 100 index is used to gauge the exchange's performance.

2. Shanghai Stock Exchange

SSE is one of three autonomous stock exchanges in the People's Republic of China; the other two are Shenzhen and Hong Kong, both of which are included in this list. Although it was just established in 1990, the Shanghai Stock Market is the world's fourth-largest stock exchange. Although the exchange was founded in 1866, it was discontinued in 1949 due to the Chinese revolution.

Each stock listed on the SSE has two types of shares: 'A' shares, which are priced in yuan, and 'B' shares, which are priced in US dollars. Except for those who are eligible for the foreign investment scheme, 'A' shares are only available to domestic investors, but 'B' shares are available to domestic and foreign investors.

In March 2018, the Shanghai Stock Exchange's market capitalization topped $5.01 trillion. The SSE Composite index, often known as the Shanghai Composite, allows traders to track the performance of equities listed on the Shanghai Stock Exchange. PetroChina, China's Industrial and Commercial Bank, and China's Agricultural Bank are among the largest equities on the Shanghai Stock Exchange.

3. London Stock Exchange

The London Stock Exchange (LSE) was established in 1801, but its roots may be traced back to 1698, when the LSE's service consisted solely of a twice-weekly print publishing of market values. It is thus one of the oldest stock exchanges in the world. It was actually the world's largest stock market until the NYSE dethroned it during World War I. The LSE is now the world's sixth-largest stock exchange and Europe's largest stock exchange.

The London Stock Exchange Group owns the LSE, which was formed in 2007 when the LSE and the Borsa Italiana combined. With over 3000 companies from 70 countries, it is the most international stock exchange.

In March 2018, the London Stock Exchange's market capitalization was $4.38 trillion. FTSE 100 is the Financial Times Stock Exchange Index 100 Share Index. Allows traders to watch the performance of the LSE and its market capitalization. The index includes Barclays, BP, and GlaxoSmithKline, among the top 100 businesses listed on the London Stock Exchange. The FTSE 250, FTSE Small Cap, and FTSE All-Share are some of the various indices that can be used to follow companies listed on the London Stock Exchange.

4. Shenzhen Stock Exchange

The Shenzhen Stock Exchange (SZSE) is the People's Republic of China's third-largest stock exchange. Despite the fact that it was created in 1987, it did not become active until 1990. Although the SZSE is self-regulatory, the China Securities Regulatory Commission oversees it (CSRC).

In March 2018, the Shenzhen Stock Exchange had a market capitalization of $3.49 trillion, making it the world's ninth-largest stock exchange.

Because the Shenzhen Stock Exchange's listed companies are predominantly situated in China, the SZSE trades shares in Chinese yuan. The SME Board, which was formed in 2004 for manufacturing enterprises, and the ChiNext board, launched in 2009 to mimic the NASDAQ's focus on emerging markets and technology start-ups, are located on the Shenzhen Stock Exchange.

5. Frankfurt Stock Exchange

The Frankfurt Stock Exchange (FWB) was established in 1585 to fix currency rates, but it became known as one of the world's first stock exchanges in the following centuries, alongside the London Stock Exchange and the Paris Stock Exchange. The Frankfurt Stock Market was not officially formed as Germany's major stock exchange until after World War II.

The Frankfurt Stock Exchange was sold to Deutsche Börse AG in 1993, and the business was also in talks to purchase the London Stock Exchange. In 2005, the talks fell through.

The Frankfurt Stock Exchange had a market capitalization of $2.22 trillion in March 2018, making it the tenth-largest stock exchange in the world. The majority of the companies listed on the Frankfurt Stock Exchange are based in Germany or other euro-zone nations. The DAX, a blue-chip stock market index for the top 30 businesses on the FWB, which includes Adidas, BMW, and E.ON, is the major index used to track the performance of the Frankfurt Stock Exchange.

6. New York Stock Exchange

New York's Wall Street hosts the New York Stock Exchange (NYSE). Although it was created in 1817, the NYSE did not begin operations until 1963. The New York Stock Exchange Group (NYSE Group) had a bumpy route to the top, with iconic events like the 1929 Wall Street Crash and 1987's Black Tuesday. Since it surpassed the London Stock Exchange at the end of World War I, By market capitalization, it has remained the world's largest stock exchange. Intercontinental Exchange, an American futures exchange group, purchased the NYSE in 2012.

In March 2018, the New York Stock Exchange market capitalization was $23.12 trillion, accounting for approximately 40% of the total global stock market value. The New York Stock Exchange has over 2400 businesses listed, spanning industries such as finance, healthcare, consumer products, and energy. Pfizer Inc. (PFE), Exxon Mobil Corp. (XOM), and Citigrop Inc. (C) (GE) are among its more well-known firms. The most widely followed stock market index is the Dow Jones Industrial Average, an extensively used index for measuring the NYSE's value. However, components can also be listed on the NASDAQ.

7. Tokyo Stock Exchange

The Tokyo Stock Market (TSE) is Japan's largest stock exchange, having been established in 1878. Due to the country's involvement in World War II, the TSE had troubles after the war and was even halted between August 1945 and April 1949. After its owner, it was relaunched in 1949 and is now known as the Japan Exchange Group. In 2013, the Osaka Securities Stock Exchange and the Tokyo Stock Exchange merged to establish the company. The Tokyo Stock Exchange now has international partnerships, such as the London Stock Exchange.

The Tokyo Stock Exchange now has over 3575 businesses listed, bringing the TSE's market capitalization to $6.22 trillion as of March 2018. The Nikkei 225 is the Tokyo Stock Exchange benchmark index, which comprises key TSE businesses. Honda Motor Company, Toyota Motor Corporation, and Sony Corporation are just a few examples.

8. Hong Kong Stock Exchange

The Association of Stockbrokers in Hong Kong formed the Hong Kong Stock Exchange (SEHK) in 1891, and it was renamed the Hong Kong Stock Exchange in 1914. The SEHK is one of China's three stock exchanges, although the SEHL's physical trading floor closed in 2017 due to the move to electronic trading.

With a market capitalization of $4.46 trillion in March 2018, the Stock Exchange of Hong Kong is Asia's third-largest stock exchange and the world's fifth-largest. Because the firms listed are mostly based in Hong Kong, the Hong Kong Stock Exchange trades in Hong Kong Dollars (HKD). The Hong Kong Stock Exchange has 1955 companies listed; it is 20 most extensive stocks, such as AIA, Tencent Holdings, and HSBC Holdings, account for a major share of its market capitalization.

9. Euronext Stock Exchange

The Euronext Stock Exchange is headquartered in Amsterdam, although it serves a pan-European market that includes the Netherlands, Portugal, Belgium, France, Ireland, the United Kingdom and the United Kingdom. It was established in 2000 to represent the entire European economy, which is why it uses the euro.

Euronext and the NYSE Group amalgamated in 2007 to establish NYSE Euronext, and Intercontinental Exchange took over the exchange altogether in 2013. Euronext then went public in June 2014 in order to reclaim its independence.

With a market capitalization of $4.36 trillion, Euronext is the world's seventh-largest stock exchange. There are 1300 listed firms and 30 stock indices that can be used to track the exchange's performance because it spans numerous countries. The Euronext 100 is the major stock index for Euronext-listed companies, consisting of the largest and most liquid equities on the Euronext Stock Exchange, such as AXA, Christian Dior, and Renault. 

10. Toronto Stock Exchange

In 1852, the Toronto Stock Exchange (TSX) was established. With approximately 1500 companies listed, it is Canada's largest stock exchange. Because the TSX and the Montreal Stock Exchange amalgamated in 2009, the parent firm was renamed TMX Group. In 2011, the TMX Group attempted to merge with the London Stock Exchange, but the deal fell through after shareholder permission was not obtained.

The Toronto Stock Exchange (TSX) is the third-largest stock exchange in North America and the ninth-largest in the world. In March 2018, the market capitalization was $2.29 trillion. 

Suncor Energy Inc. and the Royal Bank of Canada are two of the most important firms listed on the Toronto Stock Exchange. The S&P/TSX Composite Index, which makes up approximately 70% of the market of the Toronto Stock Exchange market capitalization, can be used to track the top 100 businesses on the TSX.

The Bottom Line

Stock exchanges are important in a country's economy. Traders and investors can trade and invest in securities as well as other financial assets such as commodities, bonds, and derivatives using their platform. Before investing, however, it is vital to understand how the market operates.

Although you cannot trade directly on the price of a stock exchange, you can trade the stock indices discussed throughout this article to acquire exposure to the overall performance of companies on the main stock exchanges.

You could also trade or invest in individual company shares on exchanges or in an exchange-traded fund (ETF) that tracks the performance of a portfolio of stocks.