What Is a Bourse?
The term bourse refers to the French word for the stock exchange. A bourse was traditionally organized as a place to buy and sell securities, commodities, options, and other investments. The word is commonly used in Europe where it is used to describe the Paris Stock Exchange and other Euronext exchanges, including those in Amsterdam and Frankfurt. The word bourse as it is used today traces its roots back to 13th century Belgium.
- The word bourse is French for stock exchange.
- Bourses are organized marketplaces for the trade of securities, commodities, derivatives, or other financial instruments.
- The term is most commonly used in Europe where it is still associated with exchanges.
- The word originated from a 13th-century trading location in Belgium outside a home with that namesake.
- There are other global exchanges that are associated with the term bourse outside Europe, including the Bahrain Bourse.
How Bourses Work
A bourse is simply a stock exchange or a marketplace. It facilitates the buying and selling of securities. These securities include things like stocks, bonds, commodities, currencies, and options, among other assets. Bourses bring together professional traders, individual investors, corporations, and governments into a single marketplace.
Bourses provide traders with a centralized location to make their trades in a quick and easy fashion. This gives the market liquidity and allows trades to take place without delay or (generally) any hitches. Although they were historically characterized by face-to-face trading, many bourses made the switch to electronic trading are now (fully) automated.
As noted above, the term bourse is commonly associated with Euronext Paris, which is also called Bourse de Paris, Paris Bourse, or the Paris Stock Exchange. Many other European exchanges are also associated with the word, including the Amsterdam Bourse (Euronext Amsterdam), Brussels Bourse (Euronext Brussels), and the stock exchange in Frankfurt.
In some cases, the word bourse is also associated with the term stock market, which represents all of the exchanges in a single country or region.
History of the Bourse
The concept of a bourse is based on the residence belonging to textile merchant Robert Van der Buerse in Bruges, where Belgian traders and financiers would gather and trade with one another in the 13th century. Those interested in exchanging commodities and other investments met in common areas to discuss transactions.
But it wasn't until the 16th century that the first modern bourse was established in Amsterdam. This exchange allowed people to trade stocks. Over time, trading became more organized and the exchange process more codified, resulting in the development of exchanges such as the New York Stock Exchange (NYSE).
The Paris Bourse dates back to the 1720s and was completely reorganized in 1999. It consists of the main exchange, equivalent to the NYSE, 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 (CME) 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.
Example of a Bourse
As noted above, the word bourse is commonly associated with exchanges in Europe, including the Paris Stock Exchange. But that doesn't mean that other exchanges don't use it either. In fact, there are several other global exchanges that are known by the term bourse, including in Bahrain.
The Bahrain Bourse, as it is known today, is a multi-asset marketplace that provides investors and others with "listing, trading, settlement, and depositary services for various financial instruments." The company was established as the Bahrain Stock Exchange in 1987 but was reorganized into the Bahrain Bourse as a shareholding company. The bourse is partnered with other regional groups, including the Union of Arab Stock Exchanges and the World Federation of Stock Exchanges (WFE) among others.
The bourse is open Sunday through Thursday between 7:30 a.m. and 3 p.m. Trading takes place between 9:30 a.m. and 1 p.m. local time. There is a pre-opening session that runs between 9:15 a.m. and 9:30 a.m. for both the main and initial listing markets. According to the company's website, there is no pre-opening session for mutual funds, debt securities, and special orders.