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{{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.

==History==<!-- This section is linked from [[Global financial system]] -->
The beginnings of lending were in Italy in the late Middle Ages. In the 14th century, Venetian lenders would carry slates with information on the various issues for sale and meet with clients, much like a broker does today.<ref>{{cite book | url=https://muse.jhu.edu/book/68456 | isbn=9781421431444 | title=The Venetian Money Market: Banks, Panics, and the Public Debt, 1200-1500 | year=2019 | publisher=Johns Hopkins University Press | access-date=20 November 2022 | archive-date=20 November 2022 | archive-url=https://web.archive.org/web/20221120095826/https://muse.jhu.edu/book/68456 | url-status=live }}</ref> Venetian merchants introduced the principle of exchanging debts between [[moneylenders]]; a lender looking to unload a high-risk, high-interest loan might exchange it for a different loan with another lender. These lenders also bought government debt issues.<ref>{{cite web | url=https://www.investopedia.com/articles/07/stock-exchange-history.asp | title=The Birth of Stock Exchanges | access-date=20 November 2022 | archive-date=26 October 2007 | archive-url=https://web.archive.org/web/20071026065858/https://www.investopedia.com/articles/07/stock-exchange-history.asp | url-status=live }}</ref> As the natural evolution of their business continued, the lenders began to sell debt issues to the first individual investors. The Venetians were the leaders in the field and the first to start trading securities from other governments, yet did not embark on private trade with India. Nor did the Italians connect on land with the Chinese [[Silk Road]]. Along the potential overland trade route, Holy Roman Emperor [[Frederick II, Holy Roman Emperor|Frederick II]] repulsed advances by Mongol [[Batu Khan|Batu Kahn]] ([[Golden Horde]]) in 1241.<ref>{{Cite journal |date=1245 |title=Letter of Güyük Khan to Pope Innocent IV |journal=Vatican Secret Archives, Vatican City, Inv. No. A. A. |issue=Arm. I-XVIII}}</ref> There is little consensus among scholars as to when corporate [[stock]] was first traded. Some view the key event as the [[Dutch East India Company]]'s founding in 1602,<ref>{{cite web | url=https://www.investopedia.com/ask/answers/08/first-company-issue-stock-dutch-east-india.asp | title=What Was the First Company to Issue Stock? | first=Andrew | last=Beattie | work=[[Investopedia]] | date=December 13, 2017 | access-date=22 March 2019 | archive-date=4 February 2020 | archive-url=https://web.archive.org/web/20200204153527/https://www.investopedia.com/ask/answers/08/first-company-issue-stock-dutch-east-india.asp | url-status=live }}</ref> while others point to much earlier developments (Bruges, Antwerp in 1531 and in Lyon in 1548). 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.<ref name="Braudel">{{cite book|last1=Braudel|first1=Fernand|title=Wheels of Commerce: Civilization & Capitalism 15th-18th Century|date=1983|publisher=Harper & Row|location=New York |isbn=0060150912 }}</ref> On the other hand, economist [[Ulrike Malmendier]] of the [[University of California at Berkeley]] argues that a share market existed as far back as [[ancient Rome]], that derives from [[Etruscan language|Etruscan]] "Argentari". In the [[Roman Republic]], which existed for centuries before the [[Roman Empire|Empire]] was founded, there were ''societates publicanorum'', organizations of contractors or leaseholders who performed temple-building and other services for the government. One such service was the feeding of geese on the Capitoline Hill as a reward to the birds after their honking warned of a Gallic invasion in 390&nbsp;B.C. Participants in such organizations had ''partes'' or shares, a concept mentioned various times by the statesman and orator [[Cicero]]. In one speech, Cicero mentions "shares that had a very high price at the time". Such evidence, in Malmendier's view, suggests the instruments were tradable, with fluctuating values based on an organization's success. The ''societas'' declined into obscurity in the time of the emperors, as most of their services were taken over by direct agents of the state.

Tradable [[Bond (finance)|bonds]] as a commonly used type of security were a more recent innovation, spearheaded by the Italian city-states of the late [[medieval]] and early [[Renaissance]] periods.<ref name="Edward P 2006, p. 286">Stringham, Edward Peter; Curott, Nicholas A.: ''On the Origins of Stock Markets'' [Part IV: ''Institutions and Organizations''; Chapter 14], pp. 324–344, in ''The Oxford Handbook of Austrian Economics'', edited by [[Peter J. Boettke]] and Christopher J. Coyne. (Oxford University Press, 2015, {{ISBN|978-0199811762}}). [[Edward Stringham|Edward P. Stringham]] & Nicholas A. Curott: "Business ventures with multiple shareholders became popular with ''[[commenda]]'' contracts in medieval Italy ([[Avner Greif|Greif]], 2006, p. 286), and [[Ulrike Malmendier|Malmendier]] (2009) provides evidence that shareholder companies date back to ancient Rome. Yet the title of the world's first stock market deservedly goes to that of seventeenth-century Amsterdam, where an active secondary market in company shares emerged. The two major companies were the [[Dutch East India Company]] and the [[Dutch West India Company]], founded in 1602 and 1621. Other companies existed, but they were not as large and constituted a small portion of the stock market (Israel [1989] 1991, 109–112; Dehing and 't Hart 1997, 54; dela Vega [1688] 1996, 173)."</ref>

[[File:Bird's-eye view of the Beurs van Hendrick de Keyser by Claes Jansz. Visscher (II) 1612 Stadsarchief Amsterdam 010001000620.jpg|thumb|right|A 17th-century engraving depicting the [[Amsterdam Stock Exchange]]]]
[[Joseph de la Vega]], also known as Joseph Penso de la Vega and by other variations of his name, was an Amsterdam trader from a Spanish Jewish family and a prolific writer as well as a successful businessman in 17th-century Amsterdam. His 1688 book ''Confusion of Confusions''<ref>[[Joseph de la Vega|De la Vega, Joseph]], ''Confusion de Confusiones'' (1688), ''Portions Descriptive of the Amsterdam Stock Exchange'', introduction by Hermann Kellenbenz, Baker Library, Harvard Graduate School of Business Administration (1957)</ref> explained the workings of the city's [[stock market]]. It was the earliest book about [[stock trading]] and inner workings of a stock market, taking the form of a dialogue between a merchant, a [[shareholder]] and a philosopher, the book described a market that was sophisticated but also prone to excesses, and de la Vega offered advice to his readers on such topics as the unpredictability of market shifts and the importance of patience in investment.

[[File:Microcosm of London Plate 075 - New Stock Exchange (tone).jpg|thumb|upright=0.85|[[London Stock Exchange]] in 1810]]
In England, the Dutch [[William III of England|King William III]] sought to modernize the kingdom's finances to pay for its wars, and thus the first government bonds were issued in 1693 and the [[Bank of England]] was set up the following year. Soon thereafter, English [[joint-stock company|joint-stock companies]] began going public.

London's first stockbrokers, however, were barred from the old commercial center known as the Royal Exchange, reportedly because of their rude manners. Instead, the new trade was conducted from coffee houses along [[Exchange Alley, London|Exchange Alley]]. By 1698, a broker named John Castaing, operating out of [[Jonathan's Coffee House]], was posting regular lists of stock and commodity prices. Those lists mark the beginning of the [[London Stock Exchange]].<ref>{{cite web | url=http://www.stockbroking101.com/stockbroker-101-a-cool-history/ | title=Stockbroker 101 - A Cool History | publisher=Stockbroker 101 | access-date=22 March 2019 | archive-date=22 August 2018 | archive-url=https://web.archive.org/web/20180822113545/http://www.stockbroking101.com/stockbroker-101-a-cool-history/ | url-status=dead }}</ref>

===18th century===
One of history's greatest [[financial bubble]]s occurred around 1720. At the center of it were the [[South Sea Company]], set up in 1711 to conduct English trade with South America, and the [[Mississippi Company]], focused on commerce with France's Louisiana colony and touted by transplanted Scottish financier [[John Law (economist)|John Law]], who was acting in effect as France's central banker. Investors snapped up shares in both, and whatever else was available. In 1720, at the height of the mania, there was even an offering of "a company for carrying out an undertaking of great advantage, but nobody to know what it is".

By the end of that same year, share prices had started collapsing, as it became clear that expectations of imminent wealth from the Americas were overblown. In London, Parliament passed the [[Bubble Act]], which stated that only royally chartered companies could issue public shares. In Paris, Law was stripped of office and fled the country. Stock trading was more limited and subdued in subsequent decades. Yet the market survived, and by the 1790s shares were being traded in the young United States. 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.<ref>{{cite web | url=https://www.loc.gov/rr/business/hottopic/stock_market.html | title=History of the NY Stock Exchange | publisher=[[Library of Congress]] | date=May 2004 | access-date=22 March 2019 | archive-date=4 April 2016 | archive-url=https://web.archive.org/web/20160404085759/http://loc.gov/rr/business/hottopic/stock_market.html | url-status=live }}</ref>

===19th century onwards===
[[File:The New Oriental Bank and Share Market, Bombay.jpg|thumb|upright=0.85|The New Oriental Bank and Share Market, Bombay (now [[Mumbai]]) in 1875 acting as [[Bombay Stock Exchange]]]]
Bombay Stock Exchange was started by Premchand Roychand in 1875.<ref>{{cite news |title=BSE may set another record, become an official tourist spot |url=https://www.newindianexpress.com/cities/mumbai/2017/oct/06/bse-may-set-another-record-become-an-official-tourist-spot-1667426.html |access-date=4 November 2021 |work=[[The New Indian Express]] |agency=[[Press Trust of India]] |date=6 October 2017 |archive-date=4 November 2021 |archive-url=https://web.archive.org/web/20211104151832/https://www.newindianexpress.com/cities/mumbai/2017/oct/06/bse-may-set-another-record-become-an-official-tourist-spot-1667426.html |url-status=live }}</ref> While BSE Limited is now synonymous with Dalal Street, it was not always so. In the 1850s, five stock brokers gathered together under a Banyan tree in front of Mumbai Town Hall, where Horniman Circle is now situated.<ref>{{cite web |title=THE PROFILE OF BOMBAY STOCK EXCHANGE LIMITED |url=https://www.researchgate.net/publication/289504506}}</ref> A decade later, the brokers moved their location to another leafy setting, this time under banyan trees at the junction of Meadows Street and what was then called Esplanade Road, now Mahatma Gandhi Road. With a rapid increase in the number of brokers, they had to shift places repeatedly. At last, in 1874, the brokers found a permanent location, the one that they could call their own. The brokers group became an official organization known as "The Native Share & Stock Brokers Association" in 1875.<ref>{{cite web |title=The History of Bombay Stock Exchange |website = [[YouTube]]| date=11 September 2014 |url=https://www.youtube.com/watch?v=oDkiJcRWvRQ| archive-url=https://ghostarchive.org/varchive/youtube/20211030/oDkiJcRWvRQ| archive-date=2021-10-30}}{{cbignore}}</ref>

The Bombay Stock Exchange continued to operate out of a building near the [[Asiatic Society of Bombay|Town Hall]] until 1928. The present site near [[Horniman Circle Gardens|Horniman Circle]] was acquired by the exchange in 1928, and a building was constructed and occupied in 1930. The street on which the site is located came to be called ''Dalal Street'' in Hindi (meaning "Broker Street") due to the location of the exchange.

On 31 August 1957, the BSE became the first stock exchange to be recognized by the [[Indian Government]] under the Securities Contracts Regulation Act. Construction of the present building, the [[Phiroze Jeejeebhoy Towers]] at [[Dalal Street]], [[Fort (Mumbai precinct)|Fort area]], began in the late 1970s and was completed and occupied by the BSE in 1980. Initially named the ''BSE Towers'', the name of the building was changed soon after occupation, in memory of Sir [[Phiroze Jamshedji Jeejeebhoy]], chairman of the BSE since 1966, following his death.

In 1986, the BSE developed the S&P [[BSE SENSEX]] index, giving the BSE a means to measure the overall performance of the exchange. In 2000, the BSE used this index to open its derivatives market, trading S&P BSE SENSEX futures contracts. The development of S&P BSE SENSEX options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform.

Historically an open outcry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system developed by [[Cmc ltd]]. in 1995. It took the exchange only 50 days to make this transition. This automated, [[screen-based trading]] platform called BSE On-Line Trading (BOLT) had a capacity of 8 million orders per day. Now BSE has raised capital by issuing shares and as on 3 May 2017 the BSE share which is traded in NSE only closed with ₹999.<ref>{{cite web |url=http://www.bseindia.com/about/tech.asp |title=BSEIndia |publisher=BSEIndia |access-date=28 July 2010 |url-status=dead |archive-url=https://web.archive.org/web/20140122172626/http://www.bseindia.com/about/tech.asp |archive-date=22 January 2014 |df=dmy-all }}</ref>

==Roles==
{{More citations needed section|date=March 2018}}
[[File:New_York_Stock_Exchange_August_2017_02.jpg|thumb|[[New York Stock Exchange]] in [[New York City]], US, is the largest stock exchange in the world.]]
[[File:NASDAQ_MarketWatch_(48105831361).jpg|thumb|[[Nasdaq]] in [[New York City]], US, is the second-largest stock exchange in the world.]]
[[File:Shanghaistockexchange.jpg|thumb|[[Shanghai Stock Exchange]] in [[Shanghai]], China, is third-largest stock exchange in the world.]]
[[File:Beursplein_5_(cropped_and_edited).jpg|thumb|Registered building of [[Euronext]] in [[Amsterdam]], Netherlands, for the [[European Union]] is the fourth-largest stock exchange in the world.]]
[[File:Korea exchange.JPG|thumb|[[Korea Exchange]] in [[Busan]], South Korea, is the fifth-largest stock exchange in the world and second-largest in Asia.]]
[[File:Shenzhen_Stock_Exchange_1-2014.jpg|thumb|[[Shenzhen Stock Exchange]] in [[Shenzhen]], China, is the seventh-largest stock exchange in the world, fourth-largest in Asia and second-largest in China.]]
[[File:Paternoster Square (1).jpg|thumb|[[London Stock Exchange]] in [[London]], UK, is the eighth-largest stock exchange in the world, largest non-EU European Stock Exchange and second largest in Europe.]]
[[File:BSE building at Dalal Street.JPG|thumb|upright=1.05|[[Bombay Stock Exchange]] in [[Mumbai]], India, is the ninth-largest stock exchange in the world, oldest and fifth-largest in Asia, largest in India. It is the fastest stock exchange in the world.{{citation needed|date=June 2024}}]]
[[File:National Stock exchange Mumbai.JPG|thumb|[[National Stock Exchange of India|National Stock Exchange]] in [[Mumbai]], India, is the tenth-largest stock exchange in the world, sixth-largest in Asia and second-largest in India.]]
[[File:Australian_Securities_Exchange_entrance_(cropped).jpg|thumb|[[Australian Securities Exchange]] in [[Sydney]], Australia, is the largest stock exchange in Oceania.]]
[[File:Sao_Paulo_Stock_Exchange.jpg|thumb|[[B3 (stock exchange)|B3]] in [[São Paulo]], Brazil, is the largest stock exchange in South America.]]
[[File:Johannesburg Stock Exchange.jpg|thumb|upright=1.05|The [[Johannesburg Stock Exchange]] in [[Johannesburg]], South Africa, is the largest stock exchange in Africa.]]

Stock exchanges have multiple roles in the economy. This may include the following:<ref>{{cite journal | last=Diamond | first=Peter A. | year=1967 | title=The Role of a Stock Market in a General Equilibrium Model with Technological Uncertainty | journal=[[American Economic Review]] | volume=57 | issue=4 | pages=759–776 | jstor=1815367}}</ref>

===Raising capital for businesses===
Besides the borrowing capacity provided to an individual or firm by the [[banking system]], in the form of [[credit (finance)|credit]] or a loan, a stock exchange provides [[company|companies]] with the facility to raise [[Financial capital|capital]] for expansion through selling [[Share (finance)|shares]] to the investing public.<ref>{{cite journal |last=Gilson |first=Ronald J. |author2=Black, Bernard S. |year=1998 |title=Venture Capital and the Structure of Capital Markets: Banks Versus Stock Markets |journal=Journal of Financial Economics |volume=47 |doi=10.2139/ssrn.46909 |s2cid=154673504 |url=https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=2152&context=faculty_scholarship |access-date=16 December 2019 |archive-date=9 May 2023 |archive-url=https://web.archive.org/web/20230509225728/https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=2152&context=faculty_scholarship |url-status=live }}</ref>

[[Capital intensive]] companies, particularly [[high tech]] companies, typically need to raise high volumes of capital in their early stages. For this reason, the public market provided by the stock exchanges has been one of the most important funding sources for many capital intensive [[Startup company|startup]]s. In the 1990s and early 2000s, hi-tech listed companies experienced a boom and bust in the world's major stock exchanges.<ref>{{Citation |last=White |first=Eugene N. |title=Bubbles and Busts: The 1990s in the Mirror of the 1920s |date=2006-04-01 |type=Working Paper |url=https://www.nber.org/papers/w12138 |access-date=2024-08-19 |series=Working Paper Series |doi=10.3386/w12138}}</ref> Since then, it has been much more demanding for the high-tech entrepreneur to take his/her company public, unless either the company is already generating sales and earnings, or the company has demonstrated credibility and potential from successful outcomes: clinical trials, market research, patent registrations, etc. This shift in market expectations has led to an increased reliance on private equity and venture capital funding in the early stages of high-tech companies.<ref>{{Cite journal |last1=Yuji |first1=Honjo |last2=Koki |first2=Kurihara |date=2023 |title=Graduation of initial public offering firms from junior stock markets: Evidence from the tokyo stock exchange |url=https://doi.org/10.1017/S0305741017000637 |journal=Small Business Economics |volume=60 |issue=2 |pages=813–841|doi=10.1017/S0305741017000637 }}</ref> This is quite different from the situation of the 1990s to early-2000s period, when a number of companies (particularly Internet boom and biotechnology companies) [[Initial public offering|went public]] in the most prominent stock exchanges around the world in the total absence of sales, earnings, or any type of well-documented promising outcome. Though it is not as common, it still happens that highly speculative and financially unpredictable hi-tech startups are listed for the first time in a major stock exchange. Additionally, there are smaller, specialized entry markets for these kind of companies with [[stock index]]es tracking their performance (examples include the [[Alternext]], [[CAC Small]], [[SDAX]], [[TecDAX]]).

====Alternatives to stock exchanges for raising capital====
Alternative investment funds refer to funds that include '''hedge funds, venture capital, private equity, angel funds, real estate, commodities, collectibles, structured products''', etc. Alternative investment funds are an alternative to traditional investment options (stocks, bonds, and cash).

===== Research and Development limited partnerships =====
Companies have also raised significant amounts of capital through [[R&D]] [[limited partnership]]s. Tax law changes that were enacted in 1987 in the United States changed the tax deductibility of investments in R&D limited partnerships.<ref>{{Cite web |last1=Fullerton |first1=Don |last2=Gillette |first2=Robert |last3=Mackie |first3=James |title=Investment incentives under the tax reform act of 1986 |url=https://home.treasury.gov/system/files/131/Report-Compendium-1987-Part5.pdf}}</ref> In order for a partnership to be of interest to investors today, the [[cash on cash return]] must be high enough to entice investors.

=====Venture capital=====
A general source of capital for startup companies has been [[venture capital]]. This source remains largely available today, but the maximum statistical amount that the venture company firms in aggregate will invest in any one company is not limitless (it was approximately $15 million in 2001 for a biotechnology company).<ref>{{Cite web |last1=Da Rin |first1=Marco |last2=Hellmann |first2=Thomas F. |last3=Puri |first3=Manju |date=October 2011 |title=A survey of venture capital research |url=https://www.nber.org/system/files/working_papers/w17523/w17523.pdf |publisher=National Bureau of Economic Research}}</ref>

=====Corporate partners=====
Another alternative source of cash for a private company is a corporate partner, usually an established multinational company, which provides capital for the smaller company in return for marketing rights, patent rights, or equity. Corporate partnerships have been used successfully in a large number of cases.

===Mobilizing savings for investment===
When people draw their savings and invest in shares (through an [[initial public offering]] or the [[seasoned equity offering]] of an already listed company), it usually leads to [[Rationality|rational]] allocation of resources because funds, which could have been consumed, or kept in idle [[Deposit (finance)|deposits]] with banks, are mobilized and redirected to help companies' management boards finance their organizations. This may promote business activity with benefits for several economic sectors such as agriculture, commerce and industry, resulting in stronger economic growth and higher [[Productivity (economics)|productivity]] levels of firms.

===Facilitating acquisitions===
Companies view acquisitions as an opportunity to expand [[product line]]s, increase distribution channels, hedge against [[volatility (finance)|volatility]], increase their [[market share]], or acquire other necessary business [[asset]]s. A [[takeover bid]] or [[mergers and acquisitions]] through the [[stock market]] is one of the simplest and most common ways for a company to grow by acquisition or fusion.

=== Facilitating company growth ===
By going public and listing on a stock exchange, companies gain access to a broader pool of investors, which can provide the necessary funds for expansion, research and development, and other growth initiatives. Additionally, being listed on a stock exchange enhances a company's visibility and credibility, making it more attractive to potential partners, customers, and employees. According to a report by the [[World Federation of Exchanges|World Federation of Exchanges (WFE)]], stock exchanges contribute to economic growth by enabling companies to access long-term capital, thereby fostering innovation and job creation.<ref name=":0">{{Cite web |date=September 2017 |title=The Role of Stock Exchanges in Fostering Economic Growth and Sustainable Development |url=https://www.world-exchanges.org/our-work/articles/the-role-of-stock-exchanges-in-fostering-economic-growth-and-sustainable-development |website=World Federation of Exchanges}}</ref>

=== Redistribution of wealth ===
While stock exchanges are not designed to be platforms for the redistribution of wealth,<ref>{{Cite journal |last1=An |first1=Li |last2=Bian |first2=Jiangze |last3=Lou |first3=Dong |last4=Shi |first4=Donghui |date=2019 |title=Wealth Redistribution in Bubbles and Crashes |url=https://www.ssrn.com/abstract=3402254 |journal=SSRN Electronic Journal |language=en |doi=10.2139/ssrn.3402254 |issn=1556-5068}}</ref> they play a significant role in allowing both casual and professional stock investors to partake in the wealth generated by profitable businesses. This is achieved through the distribution of dividends and the potential for stock price increases leading to capital gains. As a result, individuals who invest in stocks have the opportunity to share in the prosperity of successful companies,<ref>{{Cite web |title=What are financial markets and why are they important? |url=https://www.bankofengland.co.uk/explainers/what-are-financial-markets-and-why-are-they-important |access-date=2024-08-19 |website=www.bankofengland.co.uk |language=en}}</ref> effectively participating in a form of wealth redistribution through their investment activities. Thus, while not the primary purpose of stock exchanges, the opportunity for individuals to benefit from the success of businesses can be seen as a form of wealth [[Redistribution of income and wealth|redistribution]] within the financial markets.

===Profit sharing===
Both casual and professional [[stock investor]]s, as large as [[institutional investor]]s or as small as an ordinary [[Middle class|middle-class family]], through [[dividend]]s and [[stock price]] increases that may result in [[capital gain]]s, share in the wealth of profitable businesses. Unprofitable and troubled businesses may result in [[capital loss]]es for shareholders.

===Corporate governance===
By having a wide and varied scope of owners, companies generally tend to improve management standards and [[Efficiency (economics)|efficiency]] to satisfy the demands of these shareholders and the more stringent rules for public corporations imposed by public stock exchanges and the government. This improvement can be attributed in some cases to the price mechanism exerted through shares of stock, wherein the price of the stock falls when management is considered poor (making the firm vulnerable to a takeover by new management) or rises when management is doing well (making the firm less vulnerable to a takeover). In addition, publicly listed shares are subject to greater transparency so that investors can make informed decisions about a purchase. Consequently, it is alleged that public companies (companies that are owned by shareholders who are members of the general public and trade shares on public exchanges) tend to have better management records than [[privately held company|privately held companies]] (those companies where shares are not publicly traded, often owned by the company founders, their families and heirs, or otherwise by a small group of investors).<ref>{{Cite book |last1=Courtney |first1=Thomas B. |title=The law of private companies |last2=Hutchinson |first2=G. Brian |date=2002 |publisher=Tottel |isbn=978-1-85475-265-9 |edition=2nd |location=Dublin}}</ref>

Despite this claim, some well-documented cases are known where it is alleged that there has been considerable slippage in [[corporate governance]] on the part of some public companies, particularly in the cases of [[accounting scandal]]s. The policies that led to the [[dot-com bubble]] in the late 1990s and the [[subprime mortgage crisis]] in 2007–08 are also examples of corporate mismanagement. The mismanagement of companies such as [[Pets.com]] (2000), [[Enron]] (2001), [[One.Tel]] (2001), [[Sunbeam Products]] (2001), [[Webvan]] (2001), [[Adelphia Communications Corporation]] (2002), [[MCI WorldCom]] (2002), [[Parmalat]] (2003), [[American International Group]] (2008), [[Bear Stearns]] (2008), [[Lehman Brothers]] (2008), [[General Motors Chapter 11 reorganization|General Motors]] (2009) and [[Satyam Computer Services]] (2009) all received plenty of media attention.

Many banks and companies worldwide utilize securities identification numbers ([[ISIN]]) to identify, uniquely, their stocks, bonds and other securities. Adding an ISIN code helps to distinctly identify securities and the ISIN system is used worldwide by funds, companies, and governments.

However, when poor financial, ethical or managerial records become public, [[stock investor]]s tend to lose money as the stock and the company tend to lose value. In the stock exchanges, shareholders of underperforming firms are often penalized by significant share price decline, and they tend as well to dismiss incompetent management teams.

===Creating investment opportunities for small investors===
As opposed to other businesses that require huge capital outlay, investing in shares is open to both the large and small stock investors as minimum investment amounts are minimal. Therefore, the stock exchange provides the opportunity for small investors to own shares of the same companies as large investors.

===Government capital-raising for development projects===
Governments at various levels may decide to borrow money to finance infrastructure projects such as sewage and water treatment works or housing estates by selling another category of [[Security (finance)|securities]] known as [[bond (finance)|bonds]]. These bonds can be raised through the stock exchange whereby members of the public buy them, thus loaning money to the government. The issuance of such bonds can obviate, in the short term, direct taxation of citizens to finance development—though by securing such bonds with the full faith and credit of the government instead of with collateral, the government must eventually tax citizens or otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature.

===Barometer of the economy===
At the stock exchange, share prices rise and decreases depending, largely, on economic forces. Share prices tend to rise or remain stable when companies and the economy in general show signs of stability and growth. A [[recession]], [[Depression (economics)|depression]], or [[financial crisis]] could eventually lead to a [[stock market crash]]. Therefore, the movement of share prices and in general of the [[stock index]]es can be an indicator of the general trend in the economy.

=== Employment opportunities ===
Stock exchanges offer employment opportunities to various individuals such as [[Jobber (merchandising)|jobbers]] and other members who perform activities within the stock exchange. This makes the stock exchange a source of employment, not only for investors but also for the members and their employees. The diverse range of roles within the stock exchange, including trading, analysis, compliance, and administrative functions, creates an ecosystem of employment opportunities that support the operations and functions of the exchange. Additionally, the stock exchange's role in facilitating capital formation and investment in businesses also indirectly contributes to job creation and economic growth, making it a significant player in the employment landscape.<ref>{{Cite web |title=2. Securities Domain |url=https://docs.oracle.com/cd/E74659_01/html/SE/SE02_Domain.htm |access-date=2024-08-19 |website=docs.oracle.com}}</ref>

=== Regulation of companies ===
The stock exchange plays a role in regulating companies by exerting a significant influence on their management practices.<ref>{{Cite web |date=2021-02-05 |title=Role of an Exchange: What Is a Stock Exchange? |url=https://www.nasdaq.com/articles/role-of-an-exchange%3A-what-is-a-stock-exchange-2021-02-05}}</ref><ref name=":0" /> To be listed on a stock exchange, a company is required to adhere to a set of rules and regulations established by the exchange itself. These regulations serve as a framework for corporate governance, financial transparency, and accountability, thereby ensuring that listed companies operate in a manner that is conducive to investor confidence and market stability. By imposing these standards, stock exchanges contribute to the overall integrity and reliability of the financial markets, fostering an environment where companies are held accountable for their actions and decisions, ultimately benefiting both investors and the broader economy.

==Listing requirements==
Each stock exchange imposes its own [[listing requirements]] upon companies that want to be listed on that exchange. Such conditions may include minimum number of shares outstanding, minimum market capitalization, and minimum annual income.

===Examples of listing requirements===
The listing requirements imposed by some stock exchanges include:
* '''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.<ref>{{Cite web | url=https://www.nyse.com/publicdocs/nyse/listing/NYSE_Initial_Listing_Standards_Summary.pdf | title=Overview of NYSE Quantitative Initial Listing Standards | publisher=[[New York Stock Exchange]] | access-date=22 March 2019 | archive-date=18 May 2018 | archive-url=https://web.archive.org/web/20180518150605/https://www.nyse.com/publicdocs/nyse/listing/NYSE_Initial_Listing_Standards_Summary.pdf | url-status=live }}</ref>
* '''NASDAQ Stock Exchange:''' [[NASDAQ]] requires a company to have issued at least 1.25 million shares of stock worth at least $70 million and must have earned more than $11 million over the last three years.<ref>{{cite web | url=http://www.nasdaq.com/about/listing_information.stm | title=Applications, Notifications & Guides - Nasdaq Listing Center | publisher=[[NASDAQ]] | access-date=5 July 2006 | archive-date=27 September 2010 | archive-url=https://web.archive.org/web/20100927051934/http://www.nasdaq.com/about/listing_information.stm | url-status=live }}</ref>
* '''London Stock Exchange:''' the main market of the [[London Stock Exchange]] 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 {{INRConvert|250|m}} and minimum public float equivalent to {{INRConvert|100|m}}.<ref>{{cite web | url=https://www.bseindia.com/ | title=Bombay Stock Exchange | publisher=[[Bombay Stock Exchange]] | access-date=22 March 2019 | archive-date=5 September 2021 | archive-url=https://web.archive.org/web/20210905144543/https://www.bseindia.com/ | url-status=live }}</ref>
* '''The Shanghai Stock Exchange (SSE):''' To be eligible for an initial public offering (IPO) on [[Shanghai Stock Exchange|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. Also, the company’s total share capital must not be less than RMB 30 million. Companies must also submit financial reports and undergo a review by the [[CSRC]].<ref>{{Cite web |title=SHANGHAI STOCK EXCHANGE |url=http://english.sse.com.cn/ |access-date=2024-08-19 |website=english.sse.com.cn}}</ref>
* '''Australian Securities Exchange in Sydney:''' [[Australian Securities Exchange|Australia Securities Exchange in Sydney]] requires a company to meet the Profit Test by demonstrating either of the following: A$1 million aggregated profit from continuing operations over the past 3 years or A$500,000 consolidated profit from continuing operations over the last 12 months. Alternatively, a company can meet the Assets Test by fulfilling one of the following criteria: A$4 million net tangible assets or A$15 million market capitalization.<ref>{{Cite web |title=A Guide to Listing & the IPO Process in Australia |url=https://www.asx.com.au/documents/resources/A-Guide-to-Listing-SEP-18-Maddocks.pdf}}</ref><ref>{{Cite web |title=ASX History |url=http://www.asxgroup.com.au/history.htm |url-status=dead |archive-url=https://web.archive.org/web/20120423052515/http://www.asxgroup.com.au/history.htm |archive-date=2012-04-23}}</ref>

==Ownership==
Stock exchanges originated as [[mutual organization]]s, owned by its member stockbrokers. However, the major stock exchanges have ''demutualized'', where the members sell their shares in an [[initial public offering]]. In this way the mutual organization becomes a corporation, with shares that are listed on a stock 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), {{Lang|es|[[Bolsas y Mercados Españoles]]|italic=no}}, 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]].

Another example is [[Tashkent Stock Exchange]] established in 1994, three years after the collapse of the Soviet Union, mainly state-owned but has a form of a public corporation ([[joint-stock company]]). [[Korea Exchange]] (KRX) owns 25% less one share of the Tashkent Stock Exchange.<ref>{{cite web | url=https://www.uzse.uz/abouts/history?locale=en | title=Stages of the Republican Stock Exchange | publisher=[[Tashkent Stock Exchange]] | access-date=22 March 2019 | archive-date=29 February 2020 | archive-url=https://web.archive.org/web/20200229124356/https://www.uzse.uz/abouts/history?locale=en | url-status=live }}</ref>

In 2018, there were 15 licensed stock exchanges in the United States, of which 13 actively traded securities. All of these exchanges were owned by three publicly traded multinational companies, [[Intercontinental Exchange]], [[Nasdaq, Inc.]], and [[Cboe Global Markets]], except one, [[IEX]].<ref name=Reuters1-19>{{Cite news | url=https://www.reuters.com/article/us-wallstreet-exchange-idUSKCN1P11A6 | title=Major Wall Street players plan exchange to challenge NYSE, Nasdaq | first=Diptendu | last=Lahiri | work=[[Reuters]] | date=January 7, 2019 | access-date=8 January 2019 | archive-date=9 January 2019 | archive-url=https://web.archive.org/web/20190109012050/https://www.reuters.com/article/us-wallstreet-exchange-idUSKCN1P11A6 | url-status=live }}</ref><ref>{{Cite news | url=https://www.businessinsider.com/competition-among-exchanges-has-reached-a-new-low-and-its-dangerous-for-the-stock-market-2018-5 | title=Competition among exchanges has reached a new low, and it's dangerous for the stock market | first=John | last=Ramsay | work=[[Business Insider]] | date=May 23, 2018 | access-date=8 January 2019 | archive-date=9 January 2019 | archive-url=https://web.archive.org/web/20190109062158/https://www.businessinsider.com/competition-among-exchanges-has-reached-a-new-low-and-its-dangerous-for-the-stock-market-2018-5 | url-status=live }} (for recent history see also, {{Cite web | url=http://www.finra.org/investors/nyse-nasdaq-and-get-know-uss-stock-exchanges-part-1 | title=NYSE, Nasdaq and...? Get to Know the U.S.'s Stock Exchanges, Part 1 | publisher=[[Financial Industry Regulatory Authority]] | date=August 17, 2016 | access-date=8 January 2019 | archive-date=7 May 2019 | archive-url=https://web.archive.org/web/20190507200444/http://www.finra.org/investors/nyse-nasdaq-and-get-know-uss-stock-exchanges-part-1 | url-status=dead }}, and {{Cite web |url=http://www.finra.org/investors/get-know-uss-major-stock-exchanges-part-2 |title=Get to Know the U.S.'s Major Stock Exchanges, Part 2 |publisher=[[Financial Industry Regulatory Authority]] |date=August 17, 2016 |access-date=8 January 2019 |archive-date=7 May 2019 |archive-url=https://web.archive.org/web/20190507200442/http://www.finra.org/investors/get-know-uss-major-stock-exchanges-part-2 |url-status=dead }}</ref> In 2019, a group of financial corporations announced plans to open a members owned exchange, [[Members Exchange|MEMX]], an ownership structure similar to the mutual organizations of earlier exchanges.<ref>{{Cite news | url=https://www.wsj.com/articles/wall-street-firms-plan-new-exchange-to-challenge-nyse-nasdaq-11546866121 | title=Wall Street Firms Plan New Exchange to Challenge NYSE, Nasdaq | last=Osipovich | first=Alexander | work=[[The Wall Street Journal]] | date=January 7, 2019 | url-access=subscription | access-date=8 January 2019 | archive-date=9 January 2019 | archive-url=https://web.archive.org/web/20190109012044/https://www.wsj.com/articles/wall-street-firms-plan-new-exchange-to-challenge-nyse-nasdaq-11546866121 | url-status=live }}</ref><ref name=Reuters1-19/>

== Stock market capitalization ranking ==
'''Top ten traditional stock exchanges by total market capitalization ( As of December 2024)'''<ref>{{Cite web |date=July 2024 |title=The largest stock exchanges in the world |url=https://capital.com/markets/shares/largest-stock-exchanges |access-date=2024-12-16 |website=capital.com |language=en}}</ref>
{| class="wikitable sortable centre"
!Rank
!Stock exchange
!Country
!Market capitalization
July 2024

(in billions of dollars)
|-
|1
|[[NYSE]]
|[[United States]]
|25,241
|-
|2
|[[Nasdaq]]
|[[United States]]
|20,577
|-
|3
|[[Shanghai Stock Exchange]]
|[[China]]
|6,263
|-
|4
|[[Euronext]]
|[[France]]
|6,263
|-
|5
|[[Japan Exchange Group]] ([[Tokyo Stock Exchange]])
|[[Japan]]
|5,752
|-
|6
|[[National Stock Exchange of India]]
|[[India]]
|5,130
|-
|7
|[[Shenzhen Stock Exchange]]
|[[China]]
|4,382
|-
|8
|[[Hong Kong Stock Exchange|Hong Kong Exchanges and Clearing]]
|[[China]]
|4,104
|-
|9
|[[London Stock Exchange|LSE Group London Stock Exchange]]
|[[United Kingdom]]
|3,423
|-
|10
|[[Saudi Exchange|Saudi Exchange (Tadawul)]]
|[[Saudi Arabia]]
|3,055
|}

==Other types of exchanges==
In the [[19th century]], exchanges were opened to trade [[forward contract]]s on [[Commodity|commodities]]. Exchange traded forward contracts are called [[futures contract]]s. These ''[[commodity market]]s'' later started offering future contracts on other products, such as interest rates and shares, as well as [[option (finance)|options]] contracts. They are now generally known as [[futures exchange]]s.

==See also==
{{div col|colwidth=23em}}
* [[Auction]]
* [[Asset allocation]] 
* [[Capital market]]
* [[Commodities exchange]]
* [[Corporate governance]]
* [[Diversification (finance)]]   
* [[Federation of Euro-Asian Stock Exchanges]]
* [[Financial regulation]]
* [[Financial risk management]]
* [[:fr:Histoire des bourses de valeurs|Histoire des bourses de valeurs]] (French)
* [[International Organization of Securities Commissions]]
* [[Securities market participants (United States)]]
* [[Stag profit]]
* [[Stock market crash]] 
* [[Stock market bubble]]
* [[Stock market data systems]]
* [[Standard deviation]] 
* [[Risk management]]  
* [[World Federation of Exchanges]]

'''Lists''':
* [[List of stock exchanges]]
* [[List of European stock exchanges]]
* [[List of stock exchanges in the Americas]]
* [[List of African stock exchanges]]
* [[List of stock exchanges in Western Asia]]
* [[List of South Asian stock exchanges]]
* [[List of East Asian stock exchanges]]
* [[List of Southeast Asian stock exchanges]]
* [[List of stock exchanges in Oceania]]
* [[List of countries without a stock exchange]]
* [[List of stock market indices]]
* [[List of stock market crashes and bear markets]]  
* [[List of financial regulatory authorities by country]]
* [[List of Swiss financial market legislation]]
 {{div col end}}

==References==
{{Reflist}}

==External links==
{{Wiktionary|bourse|stock exchange}}
{{Commons category|Stock exchanges}}
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{{Stock market}}
{{Stock exchanges top 18}}
{{World Federation of Exchanges}}
{{Authority control}}

[[Category:Stock exchanges| ]]
[[Category:Stock market|Exchange]]