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Tasks of the Stock Exchange


The stock exchange is a regular market for mass goods (trading instruments) that are not physically present when traded and can be standardised and exchanged and are mutually interchangeable (also called "fungible"). In other words, stock exchanges are markets: buy and sell orders are matched in such a way that the trading volume is as large as possible. There are securities, foreign, commodities and futures exchanges (derivatives exchanges).

Securities exchanges are meeting places for participants who wish to buy and sell typical financial-market products. Exchanges do not buy or sell themselves, nor do they influence prices, which are determined solely by agreement between buyers and sellers. Investors cannot participate in exchange trading personally, so they use the services of financial institutions connected to the stock exchange.

Most of today's stock exchanges are automated and not tied to a geographical location technologically. They are abstract organisations consisting mainly of an electronic trading platform and a set of rules and regulations. The location is determined by the stock-market legislation and the supervisory authority. The trading stations can be anywhere in the world.

Stakeholders of the stock exchange

A stock exchange has four main groups of stakeholders: issuers (companies) issue securities in order to raise capital for their investments. Listing the securities on a stock exchange makes it easier for them to be traded. Investors trade on the stock exchange in order to invest their financial resources or in order to sell securities when they need money. Stock exchange banks that offer general stock exchange services (also called securities dealers, brokers, intermediaries and agents) are involved both in issuing securities for issuers and as intermediaries for investors. Investors, a subgroup of the general public, are also linked to the stock exchange as a steering mechanism of the economy.