Exchange

Reviewed by Komal | Updated on Aug 26, 2020

Introduction

Exchange is a marketplace where the trade of financial instruments such as commodities and securities occur. It gives a platform to private and public sector companies and other groups to sell their securities to the public.

An exchange is a physical market where traders met to conduct business or an electronic platform. It is also known as a stock exchange in India. The stock exchanges in India are governed by the SEBI (Securities and Exchange Board of India). The most prominent exchanges in India include the NSE and BSE.

Understanding Exchange

Each exchange will define its specific listing requirements for a company or a group that wants its securities to be traded. The basic requirements for the stock exchanges include regular financial reports, audited reports, and minimum capital requirements.

The stock exchanges are also used to raise capital by companies who seek to grow and expand their operations.

When a private company tries to sell its stock for the first time on an exchange to the public, it is known as IPO.

The companies listed on a stock exchange have more control and independence because investors who purchase their securities have limited rights in the company.