Editing Stock exchange (section)

{{Short description|Organization that provides services for stock brokers and traders to trade securities}}
{{Distinguish|Stack Exchange}}
{{Use dmy dates|date=July 2021}}
{{Financial markets|Sattakinng=Sattaking}}

[[File:New_York_Stock_Exchange_-_panoramio_(2).jpg|thumb|263px|The [[New York Stock Exchange]] in [[Lower Manhattan]] is the world's largest stock exchange per total [[market capitalization]] of its listed companies.<ref name=NYSEhighestcap>{{cite web|url=https://www.forbes.com/advisor/investing/nyse-new-york-stock-exchange/|title=NYSE: What Is The New York Stock Exchange|author=Kat Tretina and Benjamin Curry|work=Forbes|date=April 9, 2021|access-date=July 25, 2022|archive-date=23 June 2022|archive-url=https://web.archive.org/web/20220623174242/https://www.forbes.com/advisor/investing/nyse-new-york-stock-exchange/|url-status=live}}</ref>]]
A '''stock exchange''', '''securities exchange''', or '''bourse''' is an [[Exchange (organized market)|exchange]] where [[stockbroker]]s and [[stock trader|traders]] can buy and sell [[security (finance)|securities]], such as [[share (finance)|shares]] of [[stock]], [[Bond (finance)|bonds]] and other [[financial instrument]]s. Stock exchanges may also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and [[dividend]]s. Securities traded on a stock exchange include stock issued by [[listed company|listed companies]], [[unit trust]]s, [[Derivative (finance)|derivatives]], pooled investment products and bonds. Stock exchanges often function as "continuous auction" markets with buyers and sellers consummating transactions via [[open outcry]] at a central location such as the floor of the exchange or by using an electronic system to process financial transactions.<ref>Lemke and Lins, ''Soft Dollars and Other Trading Activities'', §2:3 (Thomson West, 2013-2014 ed.).</ref>

To be able to trade a [[security (finance)|security]] on a particular stock exchange, the security must be [[Listing (finance)|listed]] there. Usually, there is a central location for record keeping, but trade is increasingly less linked to a physical place as modern markets use [[electronic communication network]]s, which give them advantages of increased speed and reduced cost of transactions. Trade on an exchange is restricted to [[broker]]s who are members of the exchange. In recent years, various other trading venues such as electronic communication networks, [[alternative trading system]]s and "[[dark pool]]s" have taken much of the trading activity away from traditional stock exchanges.<ref>Lemke and Lins, ''Soft Dollars and Other Trading Activities'', §§2:25 - 2:30 (Thomson West, 2013-2014 ed.).</ref>

[[Initial public offering]]s of stocks and bonds to investors is 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 are driven by various factors that, as in all [[free market]]s, affect the price of stocks (see [[stock valuation]]).

There is usually no obligation for stock to be issued through the stock exchange itself, nor must stock be subsequently traded on an exchange. Such trading may be ''off exchange'' or [[over-the-counter (finance)|over-the-counter]]. This is the usual way that [[Derivative (finance)|derivatives]] and bonds are traded. Increasingly, stock exchanges are part of a global securities market. Stock exchanges also serve an economic function in providing liquidity to [[shareholder]]s in providing an efficient means of disposing of shares. In recent years, as the ease and speed of exchanging stocks over digital platforms has increased, volatility in the day-to-day market has increased, too.