What is the Stockholm Stock Exchange (STO) .ST
The Stockholm Stock Exchange (STO) serves as a trading exchange for the Swedish securities market.
BREAKING DOWN Stockholm Stock Exchange (STO) .ST
The Stockholm Stock Exchange (STO) began in 1863 in Stockholm, Sweden under the name Stockholm Securities Exchange. In 1990, the exchange adopted automated trading and in 1993 it became a limited liability company.
In 1994, the Stockholm Stock Exchange became the first European exchange to allow trading by remote members. The exchange merged with the OM Group, also known as OMX, in 1998, the same year it entered the NOREX Alliance with the Copenhagen stock exchange. NOREX eventually grew to include stock exchanges in Oslo and Iceland as well, as regional markets sought to take advantage of greater international investment opportunities by using a common trading platform and regulatory structure.
The OMX Nordic Exchange launched in 2006, establishing a common trading profile for listing Nordic companies. Nasdaq subsequently acquired OMX in 2007.
Sweden’s 30 most-traded stocks make up the Stockholm Stock Exchange’s primary benchmark index, the market-value-weighted OMX Stockholm 30.
Nasdaq’s International Expansion
By the time Nasdaq agreed to purchase OMX ABO in May 2007, the group had expanded to include not only the Stockholm Stock Exchange, but also exchanges in Helsinki, Copenhagen and Iceland. With the merger, Nasdaq gained international presence throughout the Nordic and Baltic regions, along with an integrated trading and clearing system for equities and derivatives used extensively across the regions.
Nasdaq’s previous attempt at international expansion had involved its purchase of the European Association of Securites Dealers Automatic Quotation System (EASDAQ) in 2001, which folded after the dot-com collapse. The merger with OMX in 2007 followed a failed bid for the London Stock Exchange, making it Nasdaq’s first successful foray into international exchanges. The group has continued to expand since, and now serves capital markets worldwide.
Despite the growing availability of trading opportunities on foreign exchanges, many domestic investors will find cross-border tax issues and capital controls more complicated and expensive than their desire for international diversification warrants. Tools such as American Depository Receipts (ADRs) and domestic funds that trade in shares of international stocks may provide a more convenient method of investing in international equities.
American Depository Receipts allow investors to purchase blocks of shares of foreign stocks held and issued by U.S.-based banks. ADRs essentially act like a domestic vehicle for foreign equities. Traders can buy and sell them in U.S. dollars, receive dividend payments and generally receive tax treatment equivalent to shares of domestic stocks.
Mutual funds and exchange-traded funds (ETFs) offer similar flexibility and arguably greater familiarity, since most investors have more familiarity with these products than ADRs. Investors need only seek out mutual funds or ETFs intended to provide international exposure and purchase shares of them. Such funds generally focus on countries or regions, with additional options available for emerging markets or developed markets outside the U.S. and Canada.