A stock exchange is where pieces of ownership in businesses (stocks) are bought and sold among investors. It is an institution which presents a platform for buying and selling of obtainable securities. As a market, the stock exchange facilitates the exchange of a security (share, debenture etc.) into money and vice versa. Stock exchanges help companies lift finance, offer liquidity and safety of investment to the investors and enhance the credit worthiness of individual companies.
Characteristics or features of stock exchange are:-
- Stock exchange is a market, where securities of corporate bodies, government and semi-government bodies are bought and sold.
- It deals with shares, debentures bonds and such securities already issued by the companies.
- It regulates the trade activities so as to ensure free and fair trade.
- All the transactions in securities at the stock exchange are affected only through its authorized brokers and members.
- Stock exchanges are the financial barometers and development indicators of national economy of the country.