What is the definition of a stock exchange?

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A stock exchange is an organization that provides a place for stock traders and brokers to exchange stock and other financial securities. A stock exchange also provides a place for the issuance and redeeming of financial securities.

Role

The stock exchange provides companies a place to raise funds for growth via the sale of investment shares to the public. This helps companies to grow and provides investors with an opportunity to make money. A stock exchange can also serve as a barometer for the financial climate in a country or region of the world.

Requirements

A listing requirement is a condition that a stock exchange imposes on companies that wish to be listed on their stock exchange. Some common requirements for company listing by a stock exchange include a specified annual income, minimum amount of shares available, and minimum amount of shares outstanding.

Ownership

When stock exchanges originated, they were mutual organizations, which were owned by stock brokers who were members. Stock exchanges have started to become demutualized, which is when brokers on a particular exchange sell their stake in the exchange on the open market.

Futures Exchanges

A futures exchange is sometimes confused with a stock exchange. A stock exchange deals exclusively in stock. Futures exchanges offer products such as option contracts and interest rate shares among other commodities.

Future of Stock Exchanges

There is a growing competition between the traditional New York Stock Exchange specialist system, and Electronic Communications Networks, or ECNs. An ECN can process a large block of trades simultaneously, while the old New York Stock Exchange system relies on individual specialists.

Source:

BeginnersInvest: What is a Stock Exchange

BizEd: The Stock Exchange--Markets--Economics--Learning Materials

Money.CNN: What is a stock?

Resource:

TDD: Stock Exchanges Worldwide

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What is the definition of a stock exchange?

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