Features of Stock Exchange:
These are various qualities of a Stock Exchange. Such qualities are enumerated below:
1. Market for Securities
Stock exchange is a market, where securities of corporate bodies, government and semi-government bodies are bought and sold.
2. Deals in Second Hand Securities
It deals with shares, debentures bonds and such securities already issued by the companies. In short, it deals with existing or second hand securities and hence it is called secondary market.
3. Regulates Trade in Securities
Stock exchange does not buy or sell any securities on its own account. It merely provides the necessary infrastructure and facilities for trade in securities to its members and brokers who trade in securities. It regulates the trade activities so as to ensure free and fair trade.
4. Allows Dealings only in Listed Securities
In fact, stock exchanges maintain an official list of securities that could be purchased and sold on its floor. Securities which do not figure in the official list of stock exchange are called unlisted securities. Such unlisted securities cannot be traded in the stock exchange.
5. Transactions Effected only through Members
All the transactions in securities at the stock exchange are effected only through its authorised brokers and members. Outsiders or direct investors are not allowed to enter in the trading circles of the stock exchange. Investors have to buy or sell the securities at the stock exchange through the authorised brokers only.
6. Association of Persons
A stock exchange is an association of persons or body of individuals which may be registered or unregistered.
7. Recognition from Central Government
Stock exchange is an organised market. It requires recognition from the Central Government.
8. Working as per Rules
Buying and selling transactions in securities at the stock exchange are governed by the rules and regulations of stock exchange as well as SEBI Guidelines. No deviation from the rules and guidelines is allowed in any case.
9. Specific Location
Stock exchange is a particular market place where authorised brokers come together daily (i.e. on working days) on the floor of market called trading circles and conduct trading activities. The prices of different securities traded are shown on electronic boards. After the working hours market is closed. All the working of stock exchanges is conducted and controlled through computers and electronic system.
10. Financial Barometers
Stock exchanges are the financial barometers and development indicators of national economy of the country. Industrial growth and stability is reflected in the index of stock exchange.