Stock exchange

A stock exchange is an organized market in which securities are bought and sold. Securities are only traded on an exchange if issuers meet the reporting and financial stability requirements set by the exchange. A stock exchange can be used by issuers to sell new securities to investors, or by investors to trade existing securities amongst themselves. An essential benefit of a stock exchange is that it can reduce the liquidity risk associated with an investment, since investors can more easily sell off their investments through the exchange. A stock exchange may be physically located in one place, but is increasingly available through electronic communication networks.

Examples of stock exchanges are the New York Stock Exchange and London Stock Exchange.

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