A Stock exchange is a corporation where trading of stocks or shares of companies that has been listed in the Stock exchange is done by the stock brokers and the traders. A trading can be done in a stock exchange only by its members, nowadays all the markets have become modern and technologically advanced so trading can be done faster and from any part of the world in any stock exchange; however, the trade has to be conducted via a member in the stock exchange.
The price of the stocks or shares of the companies are mainly affected by the availability and the demand of the shares. When the trading of stocks is done during the initial offering, it is known as the “Primary trading” and when the trading of stocks is done at other times then it is known as “Secondary trading”. At the same time it is not necessary to trade the stocks through the Stock exchange; it can be done over the counter by the way similar to the trading of bonds.
The history of origin of the Stock exchanges dates back to the 11th century, but the trading of stocks only began in the year 1602 in the Amsterdam stock exchange and the Dutch East India Company became the first to issue the stocks and bonds on their company.
Stock exchange show cases many advantages like by selling shares, raising money for investment in business and make it grow. It is also a good option for people to buy shares as an investment instead of putting it in banks and more over the investor will be able to earn dividends at the end of every financial fiscal year as a part from the company’s net profit.
The Stock exchange can also be said as a show case of the economic situation of a country’s economy and if the financial situation of a country is stable, the stock market will also be on the rise and vice versa. Since it is important for a company to keep its share value good, it has to work hard and increase its management abilities and good products and at the same time satisfy its investors. Thus the Stock exchange directly and indirectly influences the economy of a country.
For every single Stock exchange, there are certain rules and regulations for a company or an organization to get listed in it like minimum market capitalization, minimum number of shares outstanding and minimum annual income.
* Bombay Stock Exchange (BSE):
Minimum Market Capitalization- Rs.2500 lakh
Minimum Public Float Equivalent- Rs.1000 lakh
* London Stock Exchange (LSE):
Minimum Market Capitalization- £700,000
Minimum Public Float Equivalent- 25 per cent
* NASDAQ Stock Exchange (NASDAQ):
It is a little quite different from the previous ones, it states that a company should have at least 1.25 million shares which amount more than $70 million and with earning of more than $11 million.
* New York Stock Exchange (NYSE):
Similar to the NASDAQ, a company should have at least million shares which amount more than $100 million and with earning of more than $10 million.
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