Stock Exchange – An Organized Market for Purchase and Sale

Stock Exchange (also called Stock Market or Share Market) is one important constituent of the capital market. It is an organized market for the purchase and sale of the industrial and financial security. A stock exchange is a form of exchange which provides services for stock brokers and traders to trade stocks, bonds, and other securities.

Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends. Securities traded on a stock exchange include stock issued by companies, unit trusts, derivatives, pooled investment products, and bonds. It often function as “continuous auction” markets, with buyers and sellers consummating transactions at a central location, such as the floor of the exchange

LSE is the oldest stock exchange in the world. While BSE is the oldest in India.

Read Also: Securities and Exchange Board of India 

Companies must meet an exchange’s requirements to have their stocks and shares listed and traded there, but requirements vary by stock exchange:

New York Stock Exchange

To be listed on the NYSE a company must have issued at least a million shares of stock worth $100 million and must have earned more than $10 million over the last three years.

To be listed on the NASDAQ a company must have issued at least 1.25 million shares of stock worth at least $70 million and must have earned more than $11 million over the last three years.

London Stock Exchange

The main market of the LSE has requirements for a minimum market capitalization (£700,000), three years of audited financial statements, minimum public float (25 per cent) and sufficient working capital for at least 12 months from the date of the listing.

Also Read: How Paper Money is Made?

Bombay Stock Exchange

BSE has requirements for a minimum market capitalization of ₹250 million (US$4.3 million) and minimum public float equivalent to ₹100 million (US$1.7 million).

Functions of Stock Exchange – Main Functions in the Market

  • Continuous and ready market for securities
  • Facilitates evaluation of securities
  • Encourages capital formation
  • Provides safety and security in dealings
  • Regulates company management
  • Facilitates public borrowing
  • Provides clearing house facility
  • Facilitates healthy speculation
  • Serves as Economic Barometer
  • Facilitates Bank Lending

Also, Read:

Difference between Sensex and Nifty

Heads of Indian Organizations


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  1. Very simple & lucid which help to grasp the concept easily.

    Thanks for your great services.


    Arul Kumar
    Legal Consultant & Prof. at Law

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