What is Stock Exchange Meaning with Examples?

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The stock exchange meaning lies in its role as a regulated arena where supply and demand for securities interact, determining their prices. For the stock market to function, the Stock Exchange must exist. It streamlines the transaction process between buyers and sellers of financial assets. The purpose of this regulatory agency is to safeguard stockholders’ assets and promote healthy market development. What does it mean to trade stocks on an exchange, and what are some common types of stock markets?

Companies that are publicly traded have a certain level of status. Indeed, this is most true in retrospective discussions. Shares of a firm can be purchased by the public once it has been listed on a stock exchange. This aids the company’s expansion efforts by providing much-needed capital.

Stock Exchange Meaning

Stock exchanges facilitate trading of publicly traded corporate shares, distinguishing them from other markets due to the inclusion of stocks, bonds, and ETPs. Unlike OTC trading, exchange transactions involve a third party, ensuring tighter regulation for investors, speculators, and listed firms. For NASDAQ listing, a company must have a minimum market cap of $70 million. Similarly, the New York Stock Exchange requires a market cap of at least $100 million for listing.

Market participants in India trade stocks, bonds, and commodities on the stock exchange. During specified hours on any business day, buyers and sellers can meet and trade financial instruments so long as they adhere to SEBI’s well-defined guidelines. Nonetheless, publicly traded corporations have limited access to stock exchange trading. However, stocks not present on major exchanges can still undergo trading via the “Over The Counter Market.” However, the value of such shares on the stock market would be low.

How Does Stock Exchange Works?

The lack of “market makers” and other “specialists” at an Indian stock exchange means that it must run on its own. Using an electronic limit order book, stock trading in India is conducted on the basis of orders. The essence of stock exchange meaning involves facilitating capital formation for businesses.

In this kind of system, the trading computer helps to automatically match orders. Financial market participants can place market orders, and the system’s function is to find the optimal limit orders to fill those orders. Due to the public nature of all market orders in an order-driven market, it simplifies understanding of all transactions.

Brokers play a crucial role in the trading system since they handle all orders placed on the stock exchange. DMA, or direct market access, is advantageous for both institutional and retail investors. Use of the trading terminals provided by stock exchange market brokers allows investors to place orders directly into the trading system.

A Variety of Stock Markets

There are numerous stock exchanges located all around the globe. Some of the largest stock exchanges in the world include the NYSE in New York, the NASDAQ in the United States, and the Tokyo Stock Exchange in Japan (JPX). Popular stock exchanges include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), and the Hong Kong Stock Exchange (BSE).

Stock Exchanges in India

Traders may have less concern for the solvency of counterparties if they do their business on a stock exchange. It’s due of the stringent regulations surrounding stock markets. The two primary categories of Indian stock exchanges are detailed here. Transparency and regulation are integral to the stock exchange meaning.

Bombay Stock Exchange (BSE)

In 1875, the first stock exchange in Mumbai opened on Dalal Street. It is the oldest stock market in Asia and the 10th largest in the world. There are around 6000 businesses listed on the Bombay Stock Exchange, giving it a market valuation of $4.9 Trillion as of April. The Sensex is a barometer of the BSE’s health; it has recently hit a record high, indicating a period of exceptional growth.

National Stock Exchange (NSE)

In 1992, Mumbai became home to the NSE, or National Stock Exchange. As India’s first fully computerised stock exchange, it deserves the distinction of being the country’s first demutualized financial market. This market emerged to counter the Bombay Stock Exchange’s dominance in India’s financial sector.

The market capitalization of National Stock Exchange was an estimated US$ 4.1 trillion in March of 2016, placing it as the world’s twelfth largest stock exchange. Foreign investors use NSE’s NIFTY 50 index to gauge the health of the Indian stock market.

Variety of American Stock Markets

With new shareholders on board, a public corporation must consider its obligations to those individuals. The two largest marketplaces in the United States for financial securities are the New York Stock Exchange and the Nasdaq. Stock exchange meaning also extends to its impact on the broader economy.

New York Stock Exchange (NYSE)

New York City is home to the original stock exchange, which opened in 1790 as the New York Stock Exchange (NYSE). To become NYSE Euronext, the New York Stock Market and the European stock exchange Euronext merged in April 2007. A subsidiary of NYSE Euronext, NYSE Arca (formerly the Pacific Exchange).

For New York Stock Exchange listing, a company requires shareholder equity exceeding $4 million. While over 80% of trading occurs online, the exchange building remains a visible presence on Wall Street in New York City.

In 2008, the New York Stock Exchange (NYSE) acquired the American Stock Exchange (AMEX), another prominent New York stock exchange. Unlike the Nasdaq and the NYSE, AMEX was primarily concerned with exchange-traded funds (ETFs).


The NASDAQ (National Association of Securities Dealers Automated Quotations) is the largest electronic market, making it a stark contrast to the AMEX. The NASD, or the National Association of Securities Dealers, launched it back in 1971.

A computerized system and more recent information make it superior than the New York Stock Exchange. Some of the world’s largest corporations, including tech heavyweights Apple, Google, Amazon, and Microsoft, have chosen to list with it because of the lower listing fees than those offered by the NYSE.


Stock markets are also vulnerable to crashes. Stock market collapses are rare, but when they do occur, they can cause stock values to plummet and recessions to go on for years. A risk management plan can help traders and investors weather the storms of the stock market. To increase your knowledge on stock market meaning, continue reading.

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