Stock exchange

A stock exchange is a corporation or mutual organization which provides the facilities for stock brokers to trade company stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities], as well as other financial instruments and capital events including the payment of income and dividends.

Related Topics:
Corporation - Mutual organization - Stock brokers - Stock - Securities - Capital event

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The securities traded on a stock exchange include shares issued by companies, unit trusts and other pooled investment products as well as bonds. To be able to trade a security on a certain stock exchange, it has to be listed there.

Related Topics:
Shares - Unit trust - Bond

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Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only; a stock broker is said to have a seat on the exchange.

Related Topics:
Electronic networks - Stock broker

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A stock exchange is often the most important component of a stock market. There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that bonds are traded.

Related Topics:
Stock market - Over-the-counter - Bond

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The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market.

Related Topics:
Investor - Primary market - Secondary market

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Increasingly all stock exchanges are part of a global market for securities.

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Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation).

Related Topics:
Free market - Stock valuation

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The French word for stock exchange is bourse.

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