What is a Stock Exchange ?

Stock exchange is a place where traders and brokers purchase and sell shares of stocks, bonds and debentures and other financial instruments these exchanges also give facilities for issue and redemption of these shares including the dividends payment securities such as stocks which are issued by different listed companies unit trust which is a form of collective statement issued under trust deed then pooled investment and bonds. Stock exchanges function often as auction markets where buyers and sellers perform transactions at a central location such as a floor of the exchange.

Nowadays electronic trading is done in the place of traditional floor trading in order to trade and share in the stock exchange it must be listed in the exchange trading on the exchange is restricted to the broker who is the member of the exchange. Initial public offering of stocks and bonds to the investors is done in the primary market and subsequent trading id done in the secondary market, the stock exchange is the main and most important or we can say the important part of the stock market.

A stock exchange is a part of global securities market these exchange also serve an economic function which provides liquidity to shareholders in giving an effective way of disposing of shares. The early history of Stock Exchange goes back to the ancient history where Mesopotamians use ancient clay tablets to calculate interest bearing loss some people say that the Dutch East India Company founded the first ever stock exchange.

The stock exchange gives companies the facility to raise the capital through the selling of shares to the people who are investing. The ownership of a stock exchange depends upon its members who are also its stockbrokers a recent which has occurred in the exchange is the de-mutualization of shares where members sell the shares in the initial public offering in this way there is a formation of mutual organization which becomes a corporation with shares that are listed in the stock exchange some of its examples include Australian stock exchange Euronet which is merged with Paulo stock exchange.

Types of exchanges are in the 19th century which was opened to trade on forwarding contracts were called as futures contracts. These commodity exchanges later started offering futures contracts on interest rates and shares and options contracts. These are now known as future exchanges.