Features of a Stock Exchange

A stock exchange can be recognised by a set of features that together distinguish it from an ordinary marketplace or an informal trading arrangement:

• An organised market — it functions under a definite set of rules, byelaws and regulations governing who may trade, how orders are placed and matched, and how settlement takes place, rather than as an unregulated, ad-hoc gathering of buyers and sellers.
• Deals only in existing (already-issued) securities — a stock exchange is a secondary-market institution; it does not itself issue new securities on behalf of companies (that happens in the primary market), it only provides the platform on which previously issued securities change hands between investors.
• A regulated body — every recognised stock exchange in India functions under the Securities Contracts (Regulation) Act, 1956, and under SEBI's continuing regulatory oversight, which approves its rules and monitors its functioning.
• Trading confined to specified/listed securities — only securities that have been formally admitted (listed) on that particular exchange can be traded on it; a company's shares cannot simply be bought and sold on an exchange without first meeting its listing requirements. …