Exchange (Oraganized Market)

A Bourse, or what is commonly known as an exchange, is a very systematized market wherein raw materials or primary products that can be traded are up for grabs. Other elements that are sold in this market are foreign currencies, contracts, and securities.

History

The name Bourse originated from a thirteenth century inn called Ter Beurze which was founded by Belgian Robert van der Buerze in 1285. During the medieval times, the hostelry became quite popular because businessmen frequented the place and many aspiring traders went there to ask for their financial advice. Thus, as the term “Beurze Purse” arouse for the financial advising services given by businessmen. The term itself was the source of “Bourse” which now means a systemized area of exchange. Through time, the inn exclusively became a trading area for goods and services.

Definition

An exchange brings merchants and business together. Such financial mediums can usually be traded through the process of exchange along with the advantages offered by an institution that coordinates information exchange (clearinghouses) in order to handle over the counter transactions and/or non-payment. Through the years, clearinghouses have regulated risks in trade especially those with lesser securities against counterpart fraud. Alongside, regulators have also places more pressure on the over the counter market to openly showcase and clear their trades.

Divisions of exchange:

Exchanges can divided according to items sold like securities, stocks, and foreign currencies and kind of trade like classical exchange for derivatives.

Future exchanges in application are typically known as commodity exchanges such as financial derivatives or al derivatives for that matter. These are typically sold and bought at a commodity exchange. This fact has some reasons from a historical basis.

Stock exchange was the very first kind of exchange. During the nineteenth century, exchanges were established for trading forward on commodities and contacts. Through exchange, contracts were traded forward on goods and services.  With exchange contracts were traded further and these are known as future contracts. The exchange of goods and services were then offered future contracts on many other products likes shares including interest rates and option contracts. Future exchanges are what it is now typically known for.