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Stock exchange

A stock exchange is a regulated marketplace where buyers and sellers come together to trade financial securities — most commonly stocks, but also bonds, ETFs, and derivatives. It acts as the central hub for public trading, ensuring that transactions are executed in a fair, transparent, and orderly way.
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Companies list their shares on a stock exchange through an initial public offering (IPO). Once listed, the company’s stock is available to the public, and its price is determined by supply and demand in the marketplace.

When you place a trade to buy or sell a stock, the exchange:

  • Matches your order with someone on the other side (a buyer or seller),
  • Executes the transaction at the market price (or your limit price),
  • And records the trade for regulatory and reporting purposes.

Exchanges are powered by electronic systems, with some (like NYSE) still maintaining a physical trading floor, while others (like NASDAQ) are fully digital.

  • New York Stock Exchange (NYSE) – The largest exchange by market capitalization, home to blue-chip U.S. companies.
  • NASDAQ – A fully electronic exchange known for its tech-heavy listings.
  • London Stock Exchange (LSE) – A major European exchange with global reach.
  • Tokyo Stock Exchange (TSE) – Asia’s largest exchange.
  • Shanghai and Hong Kong Exchanges – Key players in Chinese and international finance.
  • Euronext, Deutsche Börse, and others – Serving various regions in Europe.

While common stocks are the main attraction, exchanges also host trading in:

  • Preferred shares
  • Exchange-traded funds (ETFs)
  • Corporate and government bonds
  • Options and futures (on specialized exchanges or affiliated platforms)

All these assets are considered securities, and the exchange provides the infrastructure for orderly price discovery and trade execution.

Stock exchanges serve three essential roles in the financial system:

  1. Liquidity: They make it easy to buy and sell assets quickly and efficiently.
  2. Price discovery: They provide a real-time view of what assets are worth based on investor demand.
  3. Access to capital: They allow companies to raise money from the public by issuing shares.

For investors, stock exchanges offer a trusted environment to invest, trade, and build wealth. For companies, they provide visibility, credibility, and the capital needed to grow.

  • A stock exchange is where public securities are listed, traded, and regulated.
  • It connects companies with investors and buyers with sellers, ensuring transparent and efficient transactions.
  • Exchanges are overseen by regulatory bodies (like the SEC in the U.S.) to maintain fairness and integrity.
  • Not all trades happen on exchanges — some occur “off-exchange” via alternative trading systems or dark pools — but exchanges remain the core platform for price transparency.