- The stock exchange is an organization that allows investors and traders to carry out transactions with securities. It provides control over the participants and guarantees fairness and speed of transactions. Each completed transaction is subject to registration.

Auction Market

In these exchanges, buyers and sellers come up with competitive bids and offers. Market makers want to sell assets at a higher price, takers - but at a lower price. When buy and sell orders are matched, deals are executed. Today, this matching is done automatically by electronic algorithms and used by some exchanges, including New York Stock Exchange.

Dealer Market & Brokers

A broker is a company that mediates between private clients and major financial institutions and provides traders with access to a platform where they can buy and sell currencies, stocks, precious metals and other assets.

As a rule, a retail investor cannot access a stock exchange without the assistance of a broker.

Representatives of this market include major Forex brokers and banks that have exchange trading departments.

Electronic Stock Exchanges

As its name suggests, there is no manual physical activity and no trading floor - orders are matched by an electronic trading algorithm. These exchanges are faster and more efficient. They can process transactions worth billions of dollars within a day. The Nasdaq and ECNs (Electronic Communication Networks) are the most prominent stock exchanges in this sphere.

OTC Markets

This is a general term for all stock exchanges other than described above. Over-the-counter (OTC) usually lists small companies, issuers that were delisted from large exchanges, and other securities.

The exchange maintains fair pricing for the securities market and serves to connect buyers and sellers. All issuers are required to submit their financial statements to the exchange before being admitted to trading. Transactions take place at a certain time in accordance with the rules established on the exchange. Information about them is in the public domain, you can find it on the website of the corresponding exchange.

As for the stock exchange’s major functions, those include:

Creation of a permanently operating securities market.

Reallocation of funds between countries, different sectors of the economy and industry within one country, as well as between individual organizations.

Fixing the investor's share in a particular stock.

Providing market liquidity and executing trades in exchange for transaction fees.