Q.Explain the features (characteristics) of a stock exchange.

A stock exchange can be told apart from an ordinary marketplace by a handful of defining characteristics.

A stock exchange has several distinguishing features:

1. An organised market — it operates under a definite set of rules, byelaws and regulations governing membership, order placement, trade matching and settlement, rather than as an informal gathering.
2. Deals only in existing (already-issued) securities — being a secondary-market institution, it does not itself issue new securities; it only provides the platform on which previously issued securities change hands.
3. A regulated body — every recognised exchange functions under the Securities Contracts (Regulation) Act, 1956, and under SEBI's continuing supervision, which approves its rules and monitors its working.
4. Trading confined to listed securities — only securities formally admitted (listed) on that exchange can be traded on it.
5. Historically membership-based, now largely electronic — trading was traditionally restricted to the exchange's registered members (brokers) acting for the investing public; today, Indian exchanges use almost entirely screen-based electronic trading, with orders matched automatically by computer rather than through open-outcry floor trading.

Assuming stock exchanges still function through physical floor trading — nearly all trading on Indian exchanges today is screen-based/electronic, not open-outcry.