Exchange

Exchanges bring buyers and sellers together in one place, physical or electronic, with standard rules for trading, pricing and settlement. Well-known examples include major stock exchanges in New York, London, Tokyo, Shanghai and Mumbai, as well as exchanges for futures and commodities.

Exchanges provide several benefits. They make prices visible to all participants, so investors can see what others are paying. They set rules that listed companies must follow, such as publishing financial reports. They standardise contracts, which makes trading easier. And they often work with clearing houses that guarantee trades will be completed.

Companies list their shares on an exchange to raise money and to give investors an easy way to buy and sell their shares. Listing requires meeting the exchange's standards and continuing to follow its rules.

Today, most trading is electronic. Orders from brokers are matched automatically by computer systems. Not all trading happens on exchanges; many bonds, currencies and derivatives trade over the counter, directly between parties.