Question

State any four features of the stock exchange.

Answer 1

1. Market for securities: Stock exchange is a place where all types of corporate securities as well as securities of government and semi-government bodies are traded.
2. Second-hand securities: Securities traded on the stock exchange are those securities that are already issued by the companies. In other words, secondhand securities are bought and sold among investors in a stock exchange.
3. Listed securities: Only securities that are listed with the stock exchange can be traded on a stock exchange. A listing of securities helps in protecting the interests of investors, as companies have to strictly comply with the rules laid down by the stock exchange.
4. Organised and Regulated Market: All listed companies have to comply with the guidelines of SEBI. Companies will also have to function as per the rules and regulations laid down by the stock exchange.
5. Specific Location: A stock exchange is a specific physical place where securities are traded. It is a marketplace where brokers and intermediaries meet to conduct dealings in securities. Today, all trading is done electronically on a stock exchange.
6. Trading only through members: Securities in a stock exchange can be traded only by the members of the exchange on their own behalf or through authorised brokers.