Stock Exchange Guide and General Information
A stock exchange, bourse or share market is an organization or corporation which provides facilities for a stock broker and trader to trade company stocks and securities.
Stock exchanges provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends.
The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. There is usually a central location 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. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks.
There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that bonds are traded. Increasingly, stock exchanges are part of a global market for securities.