A stock exchange, share market or bourse is a
corporation or
mutual organization which provides facilities for
stock brokers and
traders, to trade company
stocks and other
securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and
dividends. The securities traded on a stock exchange include:
shares issued by companies,
unit trusts and other pooled investment products and
bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are
electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to
investors is by definition 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 is driven by various factors which, as in all
free markets, affect the price of stocks (see
stock valuation).
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