Exchange

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What is an 'Exchange'

An exchange is a marketplace in which securities, commodities, derivatives and other financial instruments are traded. The core function of an exchange - such as a stock exchange - is to ensure fair and orderly trading, as well as efficient dissemination of price information for any securities trading on that exchange. Exchanges give companies, governments and other groups a platform to sell securities to the investing public.

An exchange may be a physical location where traders meet to conduct business or an electronic platform.

May also be referred to as "share exchange" or "bourse" depending on geographical location.

BREAKING DOWN 'Exchange'

Exchanges are located all around the globe, with some of the more famous ones being the New York Stock Exchange, Nasdaq and the Tokyo Stock Exchange. More and more trading is being done on electronic exchanges as markets become more advanced and as the exchanges themselves are able to ensure fair trading without requiring all members to be on the same trading floor.

Each exchange will have certain listing requirements for any company or group that wishes to offer securities for trading. Some exchanges are more rigid than others, but basic requirements for stock exchanges include regular financial reports and audited earnings reports.

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RELATED FAQS
  1. Why are traders on the floor of the exchange?

    Before the advent of electronic trading platforms, the floor of the stock exchange was the location for market transactions ... Read Answer >>
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