The equity market, as we know it, was founded in the 17th century
In 1602, the Dutch East India Company became the world’s first business to sell shares on the Amsterdam Stock Exchange. This was to raise funds to travel to the East Indies and establish trading routes — a very risky business, with a high probability of the loss of ships through piracy or sinking. So, instead of investing in one voyage and risking all of their investment, investors could buy shares in multiple voyages, with multiple shipping businesses, to spread their risk. This allowed the East India Company to raise funds for their voyages and shareholders were entitled to a fixed percentage of East India Company’s profits. A win-win. In 1801, the London Stock Exchange was created followed by the New York Stock Exchange in 1817. All of the world’s major economic players followed suit. Today, there are over 60 stock exchanges in the world and the size of the global equity market is c. US$76 trillion.
National stock exchanges made sense back then
Stock exchanges were formed in an era of nation-building. In the 17th, 18th and 19th centuries, the major European countries were laying claim to far-away lands for political and commercial benefit. They were forming strategic trade alliances. They were fighting wars. The vast majority of organisations selling shares were governments and large businesses. Raising capital by selling shares to your country-men made perfect sense. Buying shares in businesses in your own country made sense. Remember, this was a time when the exchange of information was limited to mail, newspapers and telegrams…way before the internet. So information on stocks and shares was largely confined to your own city and country.
Today’s equity market is different
Today’s businesses are global. Today’s investors are global. So today’s equity market should be global, right? Trading in stock markets simply means the transfer for money of a stock/security/share from a seller to a buyer. In a global world, national stock exchanges don’t make sense anymore do they? Why can’t we buy shares in a business in a different country? Why can’t a business raise capital by offering shares to global investors? We can easily find information on any business in today’s global world so we’re in a far better position than ever to invest in any global business. And yet we can’t. Or rather sometimes we can, depending on where you live, if you’re happy to pay exorbitant fees and go through a complex process. It shouldn’t be this hard to be a global business. It shouldn’t be this hard to be a global investor.
Are we ready for a world of global stock exchanges?
We think so. This could happen with crypto-currencies. Imagine a world where crypto-currencies are traded on global exchanges, with no recourse to national stock exchanges. It’s early days for crypto-currency right now, so it’s a wild west trading environment at the moment. Massive price fluctuations. Varying prices between exchanges due to the early days of arbitrage. But imagine an independent and transparent global currency completely untouched by the established stock exchanges or government bodies. Not that they’d be happy about it! So why can’t this work for the global equity market in a similar way? Of course there are challenges to consider like liquidity and exchange rates. But we believe that these can be overcome. We imagine a world where any global business, can raise capital in any fiat or crypto currency, by selling shares in any fiat or crypto currency, to any global investor. The global equity market needs to be disrupted. The equity market hasn’t changed significantly in centuries. We’re going to change that.
Chainium has rebranded to Own. For more information about our brand change please read this medium post.
