Purpose of Stock Exchange

As you already know from my previous article that stock market won’t function if stock exchange stops its work. It plays a key role in performing every transaction of shares.

But why should I bother of its functioning..? All I want is my trade to get settled.

Is that the case..? Should an investor or trader have a concern of what stock exchange is all about.?

YES.  Of course.

Without the knowledge of exchange, you cannot even take a single step in the stock market trading. It has all the information that you need to start your trade. Company name, trading price, last traded records etc. Not only this, you can also check the company background from the information provided.

This information helps you to know where your company is listed and figure out that in which platform you need to execute your trade.

So can you say that stock exchange is a platform for executing the trade only?

I would rather say that stock exchange is nothing more than a  globally networked and organized marketplace where a huge sum of cash is moving back and forth, where company securities and other financial assets are traded each day.

It becomes a place for price negotiation and transactions. There can be a physical stock exchange or an electronic platform.

The stock exchange has their own listing requirements for businesses to go public and list their name on that specific exchange.

For example
BSE has a  requirement for a minimum market capitalization of ₹250 million (US$3.7 million) and minimum public float equivalent to ₹100 million (US$1.5 million)

Stock exchange serve 2 purposes of its existence

1) Provide a place to raise capital for businesses, corporations, and govt to fulfill financial needs and grow their business, once they conduct their IPO.
2) Place on the secondary market where individual investor/trader can find the listed companies and trade their stocks.

Stock Exchanges are located in most countries throughout the globe, with several of the more prominent being the New York Stock Exchange (NYSE), the Nasdaq, the London Stock Exchange (LSE) and the Tokyo Stock Exchange (TSE)

In India, you can find Two major stock exchanges namely
1)Bombay Stock exchange
2)National stock exchange

These two exchanges reflect the whole economic condition of India. And to start with trading you first need to understand what they actually are?

The stock exchange is a place where price fluctuations of shares take place. All price values are displayed using ticker tape. I would rather say whenever someone thinks of the stock market the first thing that comes to our mind is the ticker tape.

 Want to learn how to read ticker tape. Click here

When I started trading a few years back the biggest challenge I faced was reading these ticker tapes.

Is that the case with you too..?

Let me make it a little lightweight for you so that things become a quite simpler.

Understanding index and point fluctuations can make you master in analyzing the stock market.

Come with me to become the actual Master in Stock Market. Click here

Stock Exchange Purpose

Post Author: Sushant Putatunda

1 thought on “Purpose of Stock Exchange


    (August 20, 2017 - 1:16 pm)

    Hey Sushant
    Nicea Article, Great Work. Keep it up !

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