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A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments.

Securities traded on a stock exchange include stock issued by listed companies, unit trusts, 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. To be able to trade a security on a particular stock exchange, the security must be listed there. Trade on an exchange is restricted to brokers who are members of the exchange. In recent years, various other trading venues such as electronic communication networks, alternative trading systems and "dark pools" have taken much of the trading activity away from traditional stock exchanges. Initial public offerings 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 markets, 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. Increasingly, stock exchanges are part of a global securities market.

The first book in history of securities exchange, the Confusion of Confusions, was written by the Dutch-Jewish trader Joseph de la Vega and the Amsterdam Stock Exchange is often considered the oldest "modern" securities market in the world. On May 17, 1792, the New York Stock Exchange opened under a Platanus occidentalis (buttonwood tree) in New York City, as 24 stockbrokers signed the Buttonwood Agreement, agreeing to trade five securities under that buttonwood tree. Historically an open outcry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system developed by Cmc ltd. in 1995.

Therefore, the stock exchange provides the opportunity for small investors to own shares of the same companies as large investors.

Stock exchanges offer employment opportunities to various individuals such as jobbers and other members who perform activities within the stock exchange.

Each stock exchange imposes its own listing requirements upon companies that want to be listed on that exchange.

New York Stock Exchange: the New York Stock Exchange (NYSE) requires a company to have issued at least 1.1 million shares of stock worth $40 million and must have earned more than $10 million over the last three years. London Stock Exchange: the main market of the London Stock Exchange (LSE) requires a minimum market capitalization (£700,000), three years of audited financial statements, minimum public float (25%) and sufficient working capital for at least 12 months from the date of listing. Bombay Stock Exchange: Bombay Stock Exchange (BSE) requires a minimum market capitalization of ₹250 million (US$2.6 million) and minimum public float equivalent to ₹100 million (US$1.0 million). The Shanghai Stock Exchange: To be eligible for an initial public offering (IPO) on the Shanghai Stock Exchange (SSE), a company must meet certain criteria such as minimum market capitalization, a minimum net profit, and a minimum number of shareholders.

Examples are Australian Securities Exchange (1998), Euronext (merged with New York Stock Exchange), Nasdaq (2002), Bursa Malaysia (2004), the New York Stock Exchange (2005), Bolsas y Mercados Españoles, and the São Paulo Stock Exchange (2007). The Shenzhen Stock Exchange and Shanghai Stock Exchange can be characterized as quasi-state institutions insofar as they were created by government bodies in China and their leading personnel are directly appointed by the China Securities Regulatory Commission. Korea Exchange (KRX) owns one share less than 25% of the Tashkent Stock Exchange.

Quick Facts

• There is usually no obligation for stock to be issued through the stock exchange itself, nor must stock be subsequently traded on an exchange.
• Examples are Australian Securities Exchange (1998), Euronext (merged with New York Stock Exchange), Nasdaq (2002), Bursa Malaysia (2004), the New York Stock Exchange (2005), Bolsas y Mercados Españoles, and the São Paulo Stock Exchange (2007).
• New York Stock Exchange: the New York Stock Exchange (NYSE) requires a company to have issued at least 1.1 million shares of stock worth $40 million and must have earned more than $10 million over the last three years.
• A stock exchange is often the most important component of a stock market.
• Securities traded on a stock exchange include stock issued by listed companies, unit trusts, derivatives, pooled investment products and bonds.

Source material: Wikipedia - "Stock exchange". Adapted and summarized for DiscoverScroll. Original contributors are credited through the linked Wikipedia article. Read original on Wikipedia. CC BY-SA 4.0. Changes were made from the original.