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What is a Stock Exchange? How does it work?
Stock Exchange is such a body or platform which brings the investors, sellers, buyers, traders, publicly trading institutes, etc all together for the sake of transparent trading. Stocks or shares of a company can be bought or sold through a stock exchange. Thus it is an intervening body and a common platform for both buyers and sellers of a company.
Most of the countries in the modern era have stock exchanges which enlists the publicly traded companies to create a transparent trading environment. (To get enlisted in a certain stock exchange the companies go through certain authentication procedures.)
A stock exchange can be regarded as a secondary market, as the stocks of a company on which the shares have been traded is not bought directly but from a primary dealer or broker by paying certain brokerage fees. Thus, other than the primary dealings, i.e, IPOs, a trading through stock exchange can be regarded as secondary market dealing.
In a stock exchange one cannot trade in securities directly but through registered brokers or appropriate authorities. A stock exchange of a country gives certain brokerage rights to certain organizations, and trading in such shares or stocks can be carried out through such registered participants (i.e, market participants, depository participants, etc).
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