About
Meaning of Stock Exchange is a central location for trading record keeping , modern markets keep the records in electronic mode. Now "Technology" increased speed and reduced cost of transactions. Trade on floor is by trading members only.
The initial public offering of stocks to investors is by definition done in the primary market and subsequent trading is done in the secondary market in bourse. A stock exchange is often the most important component of a stock market system. Usually no compulsion to issue stock via the exchange or regular trading, such trading is said to be off exchange or over-the-counter, exchanges are part of a world market for securities.
Companies requires fulfill the listing norms, the set of conditions set by a exchange upon companies that want to be listed, such conditions include minimum number of shares outstanding, minimum market capitalization, minimum annual income and god business track record.
Types
Structure may divided based on trading options. Currency traded types is "Forex", forward contracts are called Future exchanges, commodity exchanges offers commodity trading.
Ownership
Stock exchanges originally owned by group of entities like government bodies, Financial institutions, member stock brokers and mutual organizations. In this way the mutual organization becomes a corporation, with shares listed on a stock exchange.
Role:
Capital Raising
Provide facility to raise capital for business expansion through selling of shares to the investing public or private.
Savings in stocks investment
When people savings and invest in shares, it leads to rational allocation of resources into funds and various developmental projects, reduce idle deposits with banks, are mobilized to promote business activity with benefits for several economic sectors such as infrastructure, agriculture, commerce and industry leads stronger economic growth and higher productivity.
Company Growth
Companies stake acquisitions as an opportunity, hedge against volatility, increase its market share and other necessary business assets. A merger or take over through the "Stock Market" is one of the simplest and transparent.
Profit share
Professional stock investors get benefit through dividends and stock price appreciation that may result in capital gains and investment opportunities for small investors
Corporate governance
Generally improve their management financial standards and efficiency in order to satisfy the demands of these shareholders and public corporations by public exchanges and the government. According to regulations perfect management of records than privately held companies. When poor financial or managerial records are known by the equity investors, the share leads to lose value.
Read: Sensex - Nifty - Stock Market - History of Sensex.