Exchange

DEFINITION of Exchange

An exchange is a marketplace where you can trade commodities, stocks, or derivatives and other financial instruments.

WHAT IT IS IN ESSENCE

It is a market where shares in companies are bought and sold by brokers on behalf of investors. They can be either physical, like the New York Stock Exchange. Or digital like a bitcoin’s. 

The main function is to ensure fair and orderly trading. And the systematic spreading of price information for any securities trading.

They provide companies, governments, and others a platform to sell financial instruments to the investing public.

By centralizing the buying and selling of a particular instrument, exchanges’ goal is to make trading fair and efficient for all.  

With the rise of electronic trading, come huge progress in efficiency. Also the use of complex algorithms by traders on exchanges.

Stock exchanges have requirements for any businesses seeking to get listed.

HOW TO USE

The main function of an exchange is to ensure fair and orderly trading. In other words, to provide an efficient dissemination of price information. And for any securities trading.

Some exchanges are more rigid than others. But the basic requirements for stock exchanges include regular financial reports, audited earning reports.  Also the minimum capital requirements.

Most traders don’t deal directly with exchanges. Instead of that, they place trades via a broker.

Companies listed on the stock exchange typically have an enhanced profile.

Thanks to more visibility they can attract new customers, talented employees, and suppliers. Therefore, they are able to conduct business with leading figures in the industry.

An exchange may be a physical location where traders meet to conduct business or some electronic platform. They are known as a share exchange or ”bourse”. It depends on where they are operating. Exchanges are located in most countries worldwide.

The more well-known exchanges are the New York Stock (NYSE), the Nasdaq, the London Stock (LSE) and the Tokyo Stock (TSE), for example.