What Is a Stock Exchange

The Marketplace Where Shares Are Traded

Introduction

A stock exchange is an organized marketplace where stocks and other financial securities are bought and sold.

It provides the infrastructure that allows investors to trade shares in a transparent and regulated environment.

Without stock exchanges, buying and selling company shares would be chaotic and unreliable.

Why Do Stock Exchanges Exist?

Stock exchanges serve three major purposes:

1️⃣ Provide a secure trading platform
2️⃣ Ensure fair pricing through supply and demand
3️⃣ Maintain regulatory standards

They create trust in the financial system by enforcing rules and transparency.

How a Stock Exchange Works

When an investor places an order through a brokerage account:

  • The order is sent to the stock exchange.
  • The exchange matches the buyer with a seller.
  • The transaction is executed at an agreed price.

This process happens electronically within seconds.

Major Stock Exchanges Around the World

Some of the largest global exchanges include:

  • New York Stock Exchange (NYSE)
  • NASDAQ
  • London Stock Exchange
  • Tokyo Stock Exchange

Each exchange lists different companies and follows specific regulations.

What Is Listing?

For a company’s shares to trade on an exchange, it must be listed.

Listing requires meeting certain conditions such as:

  • Financial reporting standards
  • Minimum capital requirements
  • Corporate governance rules

This helps protect investors.

Trading Hours

Stock exchanges operate during fixed business hours.

Unlike cryptocurrency markets, stock markets are not open 24 hours a day.

Trading schedules depend on the country and exchange.

Regulation and Oversight

Stock exchanges operate under government supervision.

Regulatory bodies monitor:

  • Insider trading
  • Market manipulation
  • Fraudulent activity

This makes stock markets more structured compared to unregulated markets.

Final Thoughts

A stock exchange is the backbone of the stock market system.

It provides order, transparency, and security, allowing companies and investors to interact in a structured financial environment.

Understanding how exchanges operate helps investors trade with greater confidence.