DEFINITION

Stock exchanges are organised marketplaces in which stocks, shares and other securities are traded by members of the exchange, acting as both agents (brokers) and principals (dealers or traders). Section 2(j) of the Securities Contracts (Regulation) Act, 1956 defines a stock exchange as: “Any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities.” Stock exchanges have a physical location where brokers and dealers meet to execute orders from institutional and individual investors to buy and sell securities. Here, only members are allowed to buy or sell securities. It is a market for existing, not for new,