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I've been interested in how our modern stock markets work for a while now, and recently I've been trying my best to understand all these fancy terms, like "T+1", "clearing firm", "broker-dealer', etc. Here's a situation that I came up with, that helped me understand how markets may have evolved. Imagine you're living in 17th century Amsterdam, and you're looking to buy a lot of tulips. How would you do this? You need to find a seller, you need to know the price. Then, if you choose to buy at that price, you need to sign an agreement to exchange money for tulips at a later date that's convenient for the two of you. Where can you find a seller? You heard there's a tulip market where the tulip buyers and sellers hang out. It runs weekdays from 9:30AM to 4:00PM. There's also a pre-market and a post-market, but there aren't too many people there, so it's a lot less liquid outside of the main hours. This place is called an ...