The Grand Exchange has been updated many times, before bringing it to the current look it boasts today.
Implementing the Grand ExchangeEdit
The Grand Exchange was released on 26 November 2007. Before the Grand Exchange, Jagex had several legal issues with "real-world trading organisations". These organisations use bots and/or real world trading labour to harvest raw materials, and then either sell the raw materials to NPC shops or amass them in a "farm system". Their virtual wealth is then traded to players for real-world money. These organisations operated on both free and member worlds, and Jagex claims that their member accounts were often using stolen credit cards. The payments from stolen credit cards sometimes had to be refunded, in which case Jagex loses money.
The Grand Exchange was implemented alongside with a restriction on player-to-player trades which restricted net wealth transfers to 3,000 coins. The restriction was intended to weaken real-world traders and every type of price manipulation, but it also harmed genuine merchants and other honest players. Players complained and so Jagex to gradually relaxed the restriction to 5,000 for zero quest points, 10,000 maximum for free players, and 60,000 maximum for members. On 1 February 2010, the trade limit was updated. Friends with each others' names on the friends list for over 1 month will have their trade limit doubled when trading with each other, tripled if over 2 months, and quadrupled if over 3 months.
The Grand Exchange was also implemented alongside a staking limit in order to stop real world trading via staking.
Another major mark the trade limit left on Runescape players is the result of limited drop trading. Drop trading was a method in which one character would drop a large amount of coins and then log out. They would then go on another account in which they would wait a couple seconds and the money would appear. This was very risky but many players benefited from it. With the trade limit in effect, if a player dropped a large number of coins, then waited for it on another account to appear on the ground, it would never appear.
An update on 1 February 2011 changed all of this by bringing free trade back, but the Grand Exchange still remains as a helpful place to find a buyer/seller for an item without having to look through the forums.
Initial economic effectsEdit
Genuine merchant activities were previously some of the most profitable methods of earning coins, but the Grand Exchange has made genuine merchants almost obsolete. This means all items' transaction costs had greatly decreased, and in turn, most items' prices had decreased:
- Cooked Shark: 800 to 1700 coins (but later fell to below 1000 when Living Rock Caverns and Rocktail fish were added to the game and to 600 when free trade and the wilderness returned).
- Cooked lobster: 80 to 250 coins.
- Rune battleaxe: 25,000 to 50,000 coins.
- Rune scimitar: 25,000 to 35,000 coins (but later decreased to 20,000 when free trade and the wilderness was re-added into the game).
- Rune platebody: 55,000 to 71,000 coins (but later decreased to 38,000 when free trade and the wilderness was re-added into the game).
- Dragon hatchet: 2.0 million to 2.7 million coins (but later decreased to 1.3 million coins).
- Abyssal whip 1.5 million to 3.3 million coins (but later decreased to well below 1 million coins).
Rune equipment prices dropped significantly after a few months. Items traded on both free and members worlds were averaged by the Grand Exchange. For example, cooked lobsters were traded for 250 coins in free worlds but 200 coins in member worlds, and so the Grange Exchange price was 220. Discontinued items, especially partyhats and Christmas cracker, were primarily used in staking and so their prices dropped significantly after the removal of staking. A few items' prices, however, increased after the Grand Exchange's release. For example, bones were previously not worth the effort to collect and trade, but then their prices quickly increased to about 100 coins.
On 10 December 2007, a series of updates eliminated many macros, which were a major source of raw materials. As a result, prices for raw materials previously gathered by macros, such as yew logs and raw lobsters, increased to a higher level than their pre-GE level. Yew logs increased from about 350 coins during pre-Grand Exchange days to about 450 coins post-Grand Exchange. Raw fish are now worth more than cooked ones, except for manta rays and sea turtles, because they can still burn even with maximum cooking level. The prices of raw and cooked fish are now generally similar to their prices several years ago when macros were not a major problem.
Players' initial reactionsEdit
Most players embraced the release of the Grand Exchange because it greatly reduced their transaction costs (see above section Grand Exchange replacing genuine merchants). Some players, however, criticised the trade restrictions, especially the ±5% trade restriction and the player-to-player trade restriction. Other players criticised Jagex's lack of transparency because Jagex has neither published the Grand Exchange's pricing algorithms, nor the price ceiling and floor of each item.
Absolute prices: ceilings & floorsEdit
Almost all items had a maximum and minimum permissible price. The maximum permissible price is called a ceiling, and the minimum permissible price is called a floor. Spirit shard has a fixed price, which means it has an identical ceiling and floor.
This trade restriction was intended to reduce price manipulation and unfair interactions between players with different levels. Some examples:.
- Economic cooperation often favours players with lower levels, at least more so than Jagex intended. As an example, wine-making is a very fast way to gain cooking experience, and so some high-level players used to pay 100 coins for each jug of water. This means low-level players could fill the empty jugs and sell them for at most 246,000 coins per hour. After just one hour at the water pump a newbie could have easily bought full rune armour. Ceilings and floors reduce this sort of unfair cooperation. Price ceilings cause shortages which is the inability to buy something. For example, items such as a jug of water had a price limit so more people would try to buy jugs of water at the upper limit price. Without the limit less people would buy jugs of water because of a higher price. Also, less people fill and sell the jugs of water because they can't sell for a higher price. On the contrary, price floors cause surpluses because more people try to produce an item at the floor price because the floor price is higher than the actual price that people are willing to pay. Less people are willing to buy at the restricted price because this price is too high compared to what people are willing to sell for which may make it impossible to sell an item.
- Economic competition often favours players with higher levels. And so items used by various levels often have prices beyond the lower level players' budget. As an example, a level 9 mage needs about 102 coins to cast one earth strike, which is often too expensive for them. Ceilings and floors reduce this sort of unbalanced competition.
- Popular alchemiseable items often had floors slightly above the coins generated by high alchemy, which discourages easy magic levelling.
Sadly, the ceilings undervalue some items and the floors overvalue some items. (Overvalued items are also called junk items.) To balance their street values, they must be traded for each other using the slow player-to-player trades.
Jagex has never published a list of items displaying their ceilings and floors, although Jagex has a stickied thread on its forum for everyone to offer suggestions about new ceilings and floors for specific items. 
On 1 February 2011, after the Wilderness and Free Trade Update, ceilings & floors were removed and replaced by custom prices, there is however, still a guide price.
Jagex used a restriction on the permissible price range to slow the volatility of the market and to prevent real world trading. It meant the market responds slower to large changes in price.
- All items' prices were restricted to ±5% of their current market price. If an item's market price was 100, then its price range would be between 95 and 105. All offers outside the ±5% range were inactive, so users of the Grand Exchange had to check their offers occasionally and update them as needed.
- If a ceiling or floor was within the ±5% range, then the ceiling or floor had priority over other buyers.
With the Feb. 1st 2011 update, there is no longer a ceiling or floor for most items. Free trade has enabled an open market again which enabled players to offer any price for an item on the Grand Exchange, while sellers could decide what price they could sell their items at.
2008 market dipEdit
In August 2008, the prices of numerous expensive items, such as godswords, barrows armour, the abyssal whip, and high-level treasure trails armour, began to decrease for various reasons. This led to a collective social problem. The players, as individuals, reacted rationally by selling those items to prevent further personal losses, which collectively caused those items' prices to drop further and thus worsening the deflation. By 4 September, prices reached rock bottom for most items and even started to rise for some items. By 31 October the market dip was over, although some expensive items were still millions of coins below their prices in August.
2010/2011 market dipEdit
In the late 2010 and early 2011, players saw an unprecedented drop in the price of a number of items. Although the exact cause is unclear, many players point to the increased activity of price manipulation clans as well as speculation and uncertainty leading up to the reintroduction of free trade. The prices of a large number of items dropped by a significant margin, in some cases by as much as 50 percent. Prices continue to be highly unstable following the release of free trade on 1 February 2011.
11 April 2011 malfunctionEdit
In an 11 April 2011 update, the exchange was hit by a malfunction that slowed trade to a stand still. The malfunction gave "...submitting" loaders in excess of five minutes for some trades and prevented certain trades from taking place altogether. This malfunction ended in one of the biggest blackouts in the history of Jagex, being a blackout across all Jagex services.
9 August 2011 updateEdit
The Grand Exchange was updated on 9 August 2011. It included an update with a remake of Edgeville. It replaced the one central booth with a garden, and made 4 individual booths around the corners of the Grand Exchange. There was a glitch where you can stand in the wall around the south entrance. This was patched just over 1 hour after the update. Shortly after the remaking of the Grand Exchange Jagex shut down all servers due to a memory leak which lasted 10–15 minutes. This removed a lot of the advertising bots that usually were there on F2P servers.