What Is The Function Of Stock Exchange?

The stock exchange is an organized market for the purchase and sale of shares a debentures.

FUNCTIONS:
                       It provides a ready market for the sale and purchase of securities. This market also available for the conversion of securities into cash and vice versa. The stock exchange helps in evaluating the different securities listed with it. The prices at which bargains are made are recorded and communicated to the public. The stock exchange indicates the over all business situation, conditions for investment and the state of the economy. The stock exchange ensures fair dealings in securities through its rules and regulation. In this way it protests the interests of investors.       
  
                  The shares of a company cannot be traded in a stock exchange until the are listed. For listing of shares the companies have to observe certain rules and regulations. It provides a place for investment to those who have capital and want to invest. In other words it promotes the mobilization of capital of individuals firms and companies for investment in the shares and bonds of the companies. It helps in the allocations of available funds among different industries of country and to promote proper use of resources. A stock exchange provides facilities for speculations in the securities. It may be good and bad.

The main functions of a stock market are:
·         Serve as a link in channeling the funds from those who have excess funds to those who are in need of the funds. Firms issue their stocks because they need capital and the exchange is the place where they can find buyers through the market.
·         To make a market where people can easily sell or buy shares. When you want to trade, you can go to the exchange where you will definitely find a buyer.
·         The stock exchange is like a clearing house and guarantees that buyers and sellers play fair and that there are no frauds.
·         It is a source of information to all; it provides information to everyone thus avoiding the problem of asymmetric information and does not give an undue advantage to anyone
·         To set the fair Price of the securities being traded according to the market dynamics of supply and demand.

Stock exchange market is an important market in any economy because in this market through demand and supply the value of one currency against the other currency is determined. Stock market also provides liquidity to the investors. It determines the value of the currency at a current rate and on future specified rate. In addition, it facilitates the process of trade and guarantees the legal and economic security of the contracts.