Stock Exchange Defined
Stock Exchange Defined
Despite what many people may think, the global stock exchange is not limited to a few. Rather, there are considerable numbers of stock exchanges in the world, representing continents, major cities and even financial districts. A few examples would include: the Australian Securities Exchange, Bolsa Mexicana de Valores, Bolsa de Valores de Lima, Euronext Amsterdam, Euronext Paris, and National Stock Exchange of India. The more prominent names include: the American Stock Exchange, Hong Kong Stock Exchange, the London Stock Exchange, and NASDAQ (the National Association of Securities Dealers Automated Quotation System.) These latter examples have gained prominence over the years due to some of the more spectacular gains and losses witnessed here over the years.
The stock exchange is also known as the share market exchange. This is not simply a physical architecture where traders congregate to do business. Rather, it serves as a corporation, business entity, or mutual organization that provides the necessary facilities, technology and tools necessary for traders to observe, negotiate and engage in the options available for business. As the name implies, the stock market is utilized in order for various companies to trade stocks, examples of which include: equity shares or shares representing partial ownership of a corporation. In one trading day, in one stock exchange location, trading only in stocks can move currencies into billions of dollars.
Another function of the stock exchange is that it serves as a facility where capital, securities and other financial instruments are issued and redeemed. Examples of securities that are traded constantly in the stock exchange include: banknotes, bonds, common stocks, debentures, shares issued by companies, and unit trusts among many others.
However, there are certain rules when it comes to trading in the stock exchange… any stock exchange for that matter. First of all, in order to be part of the trading process, the company or corporation or business entity has to be listed there as a legal structure. However, with the technology available in our time, the lists of legal trading companies are less linked to the physical architecture of the stock exchange. Electronic networks and the virtual world of the World Wide Web have certainly opened more doors to global and local traders. This non-physical avenue has also helped lower transaction prices down while encouraging small time, part time, and non-professional traders and financial speculators to join in the financial fray.
Specific rules as to how to list a company for any stock exchange is mainly dependent on the company’s location, particularly because specific stock exchanges have varying rules as to their registration. For example: in the London Stock exchange, companies must have a minimum market capitalization of at least ₤700,000; whereas at the NYSE or New York Stock Exchange, a company must have issued no less than 1 million shares, amounting to $100 million in order to qualify for listing.
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