Founded in 1602 alongside the establishment of the Dutch East India Company (VOC), the Amsterdam Stock Exchange (AEX) is recognized as the oldest continuously-operating stock exchange in the world. This pioneering institution laid the groundwork for modern financial markets and the concept of trading shares.
Historical Context
The emergence of the Amsterdam Stock Exchange was driven by the increasing complexity of European trade and commerce during the Age of Exploration. As businesses flourished, financiers sought a secure and regulated venue to buy and sell shares in ventures such as the VOC, which was one of the first joint-stock companies allowing investors to profit from the lucrative spice and slave trades by funding long ocean voyages.
Prior to the formal establishment of the AEX, trading systems were localized and varied widely, resembling today’s decentralized exchanges. The AEX transformed this by becoming the first recognized stock exchange, introducing standardized practices of asset valuation and share trading.
Evolution of the AEX
Over its extensive history, the Amsterdam Stock Exchange has encountered numerous ownership changes and adapted its governance structures to fit the evolving global financial landscape.
In 1997, it merged with the European Options Exchange (EOE), leading to the official rebranding of its blue-chip index as AEX—standing for "Amsterdam Exchange." This marked a significant milestone in its growth.
The landscape shifted further in September 2000 when the AEX merged with the Brussels and Paris Stock Exchanges to form Euronext Amsterdam, ultimately resulting in the creation of Euronext, which is recognized today as Europe’s largest cash equities market. Initially part of NYSE Euronext, which operated various exchanges globally, Euronext regained its independence in 2014. By 2017, it was ranked as the sixth-largest stock exchange in the world by market capitalization.
AEX Index and Equity Classes
The AEX operates three primary equity indexes:
- AEX (blue-chip index)
- AMX (mid-cap index)
- AScX (small-cap index)
The AEX, which began in 1983, remains the most traded and significant index. It includes over 20 frequently traded Dutch companies, featuring global giants like Unilever, ING Group, Philips, and Royal Dutch Shell. The AEX functions as a vital indicator of the health of the Dutch economy and is on par with other leading European indices, including Brussels' BEL 20, Paris's CAC 40, and Germany's DAX.
Index Review Process
The composition of the AEX index undergoes a systematic review each quarter, with comprehensive evaluations completed in March and interim assessments in June, September, and December. Adjustments made during these reviews become effective on the third Friday of the review month. Prior to 2008, reviews were performed only once a year.
The AEX is a market capitalization-weighted index, meaning that larger companies have a greater influence on its performance. Initial weightings of any given company are capped at 15%. The weights are recalibrated based on the closing prices of the relevant companies as of March 1. Notably, during quarterly reviews, subsequent adjustments aim to maintain weightings as close as possible to those from the previous day without imposing new caps.
Conclusion
The Amsterdam Stock Exchange has not only shaped the modern concept of trading but continues to play a crucial role in global finance today. Its ability to adapt and evolve over four centuries demonstrates the enduring relevance of the principles of trade, investment, and stock market operations that it pioneered. As financial markets worldwide continue to change, the foundational legacy of the AEX offers valuable insights into the development of global commerce.