Stock exchange as important part of Trade Market

The stock exchange is the most prevalent or popular mode of exchange that gives services to all sort of traders and stock brokers to carry on stock, securities and bonds’ trade. It provides the advantage for redemption and issue of securities, capital events that include income and dividend payment and other financial instruments. Traded securities on stock exchange involve shares announced by the companies, derivatives, unit trusts, bonds and products of pooled investments.

If wants to trade security on a particular stock exchange, it has to be listed there. Although it needs a central location of record keeping but nowadays physical place are less involved. As the technology and communication networks are progressing the market is witnessing an electronic stock exchange that has its own advantages of reduced overhead expenses and increased speed. The trade is carried out on an exchange by only the members.

The starting of the bonds and stocks offering is done in the primary or open market. This is for involving wide market of investors. But later on the respective trading and dealing is done in the restricted secondary market. The supply and demand in the market is dependent on various factors that affect the cost of the stocks. Although it is not compulsory to issue stock through stock exchange and also stock need not to be traded specifically on the exchange. This type of trading is called over–the–counter or off exchange.

The stock exchange is supposed to be an important element of a stock market and also a part of global market in case of securities.