Stock exchange definition

A stock exchange is a medium by which shares are bought and sold.

Stock exchanges differ from other exchanges as the tradable assets are limited to shares (and sometimes ETPs). They differ from other means of trading shares, such as over-the-counter markets, in having strict regulations for the trading of shares and of the companies that list on them.

There are many stock exchanges, located all around the globe. Some of the more famous include the London Stock Exchange (LSE), New York Stock Exchange (NYSE) and the NASDAQ. Despite most stock exchanges keeping a physical presence where traders interact and records are kept, the majority of trades are now taken care of electronically.

When a private company wants to list on a stock exchange, it has to do so through an IPO. When this happens, the company’s newly available shares are floated on the stock market. From then on, only certain participants can trade directly on an exchange: most individual traders will buy and sell shares via a broker.

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