Stock exchanges: UPSC Daily Important Topic | 10 February 2022

Stock exchanges

It is a physically existing institutionalised set-up where instruments of security stock market (shares, bonds, debentures, securities, etc.) are traded.

It serves the following major functions:

✓Makes a floor available to the buyers and sellers of stocks. It is the single most important institution in the secondary market for securities

✓Makes available the prices of trading as an important piece of information to the investors

✓By following institutionalised rules and procedures, it ensures that the participants in the stock market live up to their commitments

✓Passes updated information to the enlisted companies about their present stockholders (so that they can pass on dividends etc., to them)

✓By publishing its ‘Index’, it fulfils the purpose of projecting the moods of the stock market.