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Stock exchange

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A stock exchange is an organization of brokers and investment bankers which has the purpose of providing the facilities for trade of company stocks and other financial instruments. 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; one is said to "have a seat" on the exchange.

In Europe, stock exchanges are often called bourse s.

The trading of stock on stock exchanges is called the stock market. Offer and demand in stockmarkets is driven by various factors that affect the value of stocks (see stock valuation).

Companies have to meet the requirements of the exchange in order to have their stocks and shares listed and traded there. To be listed on the NYSE (New York Stock Exchange), for example, a company must have issued at least a million shares of stock worth $16 million and must have more than $2.5 million net income (1998 requirements).

Derivatives, currency, and commodities--that is, agricultural products and industrial raw materials--are handled by a number of specialised exchanges.

See also: List of stock exchanges, List of stock market indices, American Stock Markets


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Last updated: 10-24-2004 05:10:45