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At the dawn of modern Europe, it was customary to establish exchanges at which prices were agreed and trading took place on the basis of samples. The oldest exchange was founded in Amsterdam in 1602. The first exchange of the Habsburg Monarchy was established in Rijeka for the purpose of trading in different sorts of sugar sold by the Rijeka refinery between 1750 and 1803. Subsequently, it became common practice for each state to have no more than one exchange, so one such exchange was established in Vienna in 1771. After the Habsburg Monarchy was divided into the Austrian and the Hungarian part in 1867, another exchange was also established in Budapest.

 

Croatian regions were split between the Austrian and Hungarian part. However, the Croatian-Hungarian Compromise granted a certain level of autonomy to Croatia and Slavonia, even though not in the field of economy, trade and transport, which were governed by the government in Budapest. Anxious to gain as much independence as possible, Croatian businessmen were striving to form the fourth economic department, so they founded an Association of Industrialists and Merchants of Croatia and Slavonia under the auspices of the Chamber of Commerce. The Association also spurred the establishment of the Commodities and Valuables Division in 1907. It was inaugurated by Milivoj Crnadak in the building of the Chamber of Commerce (in the spot currently occupied by Hotel Dubrovnik) on 15th June, 1907. S. D. Aleksander headed the division, which effectively launched the market in the stocks of local factories and financial institutions that major exchanges in Vienna and Budapest would not admit to trading. This Exchange was active until 1911, when its operations were closed down by the ruling Croatian-Serbian coalition that saw Croatia and Slavonia as constituent parts of a new Southern Slavic state with a centre in Belgrade. Since 1st January, 1895, Belgrade had had a separate Exchange that supported the expansion of Serbian capital to Croatia. More...

 

 

Croatia’s exchange did not see its revival until as late as 1991, when 25 banks and two insurance companies established the Zagreb Stock Exchange as the central place of securities trading in the Republic of Croatia.

 

The Zagreb Stock Exchange has kept this role to date. From the initial 25 members (brokerage companies), thanks to the trade growth and development the number of members has climbed to some forty-odd active traders: banks and private brokerage companies. At the very beginning, trading took place at big auctions held at the Exchange head office with all brokers actually physically present. In 1994, an electronic trading system was introduced, enabling member brokers to trade on the Exchange via a telecommunications link without leaving their offices throughout Croatia.

 

A rapid development of share ownership and trading in Croatia is best illustrated by the fact that in the first five years following the introduction of the electronic trading system, between 1995 and 2000, the Zagreb Stock Exchange market capitalization grew almost 10 times (982.6%).

 

The Zagreb Stock Exchange is very active on an international level too: it is among founders and a member of the Federation of Euro-Asian Stock Exchanges and also a corresponding member of the Federation of European Stock Exchanges. It has worked with the Organization for Economic Cooperation and Development (OECD) on drafting the principles of corporate governance, while consulting or engaging the employees of the London and the Pacific Stock Exchange as well as the U.S. Securities Commission (SEC) experts on certain individual projects.

 

 

Securities (stocks and bonds) are traded on the Zagreb Stock Exchange via the OMX electronic trading system.

Brokerage companies that are Exchange members are connected with the Exchange head office via special telecommunication lines; they enter their sell and buy orders and conclude transactions with other brokers directly from their offices. This means that the physical place where securities are traded (traditional trading floor) no longer exists, but rather trading takes place among electronically connected traders. All member brokers have access to the trading system in real time (with not time delay/shift) so that they can enjoy equal status with respect to the receipt of information on the current securities offer at exactly the same time.

 

The Exchange is open for trading between 10 a.m. and 4. p.m. every day, with the exception of holidays listed on the Exchange's website. Trading reports with daily share prices are available to any interested party in daily newspapers, from specialist financial data vendors as well as on the Exchange's website and via a specialized exchange information distribution system, named the ZSE Monitor.

 

 

The ZSE Monitor is a system that distributes exchange-related information in real time via the Internet. It enables users to access the information on total trade and to monitor current price movements with no delay, on-line.
 

It is designed for all investors, shareholders and those who still have to join their ranks, managers, analysts and anyone who wants fast, reliable and credible information on the current state and prices on the Zagreb Stock Exchange.

 

 

As a relatively young exchange, the Zagreb Stock Exchange had the opportunity to use the possibilities provided by modern technology to organize trading in order to make its operations more competitive and more readily available. As the Exchange itself developed from a low trading volume to the current level, so did the technology used it.
 

The first trading system on the Zagreb Stock Exchange required the physical presence of brokers, who were situated in a special room during an auction, directly submitting and shouting their bids to actually trade. The auction was run by an auction leader, with bids and offers and transactions entered into a computer so that all relevant data could be displayed on monitors positioned around the hall. Only one security could be traded at any given time.
 

Toward the end of 1992, the Zagreb Stock Exchange started conducting public auctions on behalf of the Croatian Privatisation Fund, using new auctions software support developed by the Exchange.

 

 

In order to reduce trading costs and simplify the trading process, in March 1994 the Exchange introduced its first electronically distributed trading system: TEST-1. For the first time, the system enabled members to trade directly from their offices, using a personal computer with a modem. Although they traded from their offices, members had a simple means of finding out what the supply and demand on the Exchange. It was done by establishing a connection with the central computer located at the Exchange premises and accepting a data package with all bids/offers and transactions. Trade was order driven and for the first time a considerably larger number of securities could be traded simultaneously and every day. The system was developed by the Zagreb Stock Exchange, and its main feature was the fact that it was available at the time when Croatia’s communication infrastructure was still underdeveloped.

 

 

Thanks to the support of CARNET, the first Internet provider in Croatia, the Zagreb Stock Exchange has presented general information about the Exchange as well as regular daily trading reports with price movements on its official website since the beginning of 1995. At the time, the Zagreb Stock Exchange was the first stock exchange in Europe and among the first in the world to have an official website.TEST-1.5
 

In April 1997, in order to meet the needs of ever-increasing trade intensity, the Exchange launched its first electronic system that enabled trading in real-time and named it TEST-1.5. Seemingly very similar to the TEST-1 system, the TEST-1.5 system included an important upgrade: Exchange members could now be connected to the Zagreb Stock Exchange at all times, with any new bids/offers submitted to them instantly and automatically. In order to ease the transition from one system to another, the TEST-1.5 system also enabled the brokers who still used the older version of the system to participate in trading.

 

 

Late in May 1999, the Exchange introduced the third generation of its electronic trading system: MOST. MOST abandoned the old software kernel, while including a simpler user interface and also compensating for a number of limitations of the TEST-1.5 system. Most importantly, it introduced automatic matching. In addition, the MOST system was designed in such a way as to enable very simple adjustments to new demands and financial products as it expanded in the course of time.
 

In a bid to make information on the status of the order book available to a growing circle of investors so as to improve trading transparency and keep up with the development of the most up-to-date market information distribution systems, in May 2000 the Zagreb Stock Exchange launched its MOST-ich system. It enabled the monitoring of trade in real time on the Internet. Subscription to the system was available either through brokerage companies or directly from the Exchange. In order to meet the need for an increasing number of Croatian Privatisation Fund auctions, early in 2001 the Exchange enabled the option to conduct these auctions through the MOST system. Since their physical presence was no longer required as members could participate in public auctions directly from their offices, the costs were reduced considerably while the system also allowed a greater number of auctions to be held.

 

 

The trading systems used by the Zagreb Stock Exchange up until autumn 2007 were more than satisfactory for the state of development of the Croatian financial market at the time. Their particularly significance lay in the fact that the very concept as well as system development were the work of a team of exclusively local experts: late Professor Dean Rosenzweig; Davorin Ruševljan, Head of Trading and Technology at the Exchange of long standing; Darko Perhoč, M.Sc., also the Exchange’s long-time expert for networks and network services; and Davorin Meštrić.
 

In 2007, the Croatian financial market consolidated as the Varaždin Stock Exchange merged with the Zagreb Stock Exchange. These new circumstances, resulting in a larger number of listed securities and greater trading volume, along with a natural development of the financial market that saw the investment climate improve and gave rise to a stronger interest of all market participants in new financial products, highlighted the need for the implementation of a new system that would be able to meet the needs of the small, but extremely fast-growing Croatian market.

 

The new trading platform, NASDAQ OMX's X-Stream, was launched in autumn 2007