What Is the Stockholm Stock Exchange (STO) .ST

The Stockholm Stock Exchange (STO) serves as a trading exchange for the Swedish securities market. Sweden’s 30 most-traded stocks make up the Stockholm Stock Exchange’s primary benchmark index, the market-value-weighted OMX Stockholm 30.

Key Takeaways:

  • The Stockholm Stock Exchange (STO) is a trading exchange for the Swedish securities market.
  • Sweden’s 30 most-traded stocks make up the Stockholm Stock Exchange’s primary benchmark index, the market-value-weighted OMX Stockholm 30.
  • The Stockholm Stock Exchange (STO) began in 1863 in Stockholm, Sweden, under the name Stockholm Securities Exchange.
  • In 1994, the Stockholm Stock Exchange became the first European exchange to allow trading by remote members.

Understanding the 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, Iceland, and 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, established a common trading profile for listed Nordic companies. Nasdaq subsequently acquired OMX in 2007.

The Stockholm Stock Exchange’s primary benchmark index, the market-value-weighted OMX Stockholm 30, includes Sweden’s 30 most-traded stocks.

Nasdaq’s International Expansion

By the time Nasdaq agreed to purchase OMX ABO in May 2007, the group had expanded to include the Stockholm Stock Exchange and exchanges in Helsinki, Copenhagen, and Iceland. With the merger, Nasdaq gained international presence throughout the Nordic and Baltic regions and 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 Securities Dealers Automatic Quotation System (EASDAQ) in 2001, which folded after the dotcom 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.

International Investing

Despite the growing availability of trading opportunities on foreign exchanges, many domestic investors find cross-border tax issues and capital controls more complicated and expensive than their desire for international diversification warrants. Tools such as American Depositary Receipts (ADRs) and domestic funds that trade in shares of international stocks may provide a more convenient method of investing in international equities.

ADRs 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 their shares. Such funds generally focus on countries or regions with additional options available for emerging markets or developed markets outside the United States and Canada.