What Is a Bourse?

A bourse is a market organized for the purpose of buying and selling securities, commodities, options and other investments. A bourse is more commonly known as a stock exchange. The word "bourse" is based on the house, belonging to Van der Burse, where merchants would gather and trade with one another.

Today the word "bourse" is more commonly associated with the Paris stock exchange, the Paris Bourse or Euronext Paris.

How Bourses Work

Historically, those interested in exchanging commodities and other investments met in common areas to discuss transactions. Over time, traders became more organized and the exchange process more codified, resulting in the development of exchanges such as the New York Stock Exchange (NYSE).

The first international bourse was established in Antwerp in the 16th century. The Paris Bourse dates back to 1720 and was completely reorganized in 1999. It consists of the main exchange, equivalent to the New York Stock Exchange, plus the Matif (the derivatives exchange) and the Monep (the equity and index options market). The Paris Bourse and seven other major European bourses agreed to form a partnership in 1999 that would create a pan-European stock exchange. That same year, the Paris bourse signed an agreement with the Chicago Mercantile Exchange and the Singapore International Money Exchange to create a "global alliance" covering the European, U.S., and Asian time zones, allowing for trading 24 hours a day.

Iranian Oil Bourse

During 2007, Iran asked its petroleum customers to pay in non-US dollar currencies. By December 8, 2007, Iran was reported to have converted all of its oil export payments to non-dollar currencies. The Kish (Iranian) Bourse was officially opened in a video conference ceremony on 17 February 2008. Currently, the Kish Bourse only trades in oil-derived products, generally those used as feedstock for the plastics and pharmaceutical industries.

Officially published statements by Iranian oil minister Gholamhossein Nozari refer to a second phase of the Kish Bourse that will establish trading in crude oil directly. Such a move may function as a precursor to creating a "Caspian Crude" benchmark price analogous to Brent Crude or WTI, but it will only be started after the Kish Bourse demonstrates a reasonable running period.

As of 2009, the Kish Bourse was a spot market for petrochemical products, with plans to introduce Sharia-compliant futures contracts for crude oil and petrochemicals during the second phase. Trading takes place through licensed private brokers registered with the Securities and Exchange Organization of Iran. Any company, domestic or foreign, can list their products on the exchange, as long as they meet the listing criteria.