How Stock Exchanges Work

A stock exchange is an organized marketplace where shares of publicly listed companies are bought and sold. Major exchanges include the New York Stock Exchange (NYSE), NASDAQ, London Stock Exchange (LSE), and many regional exchanges worldwide.

How Trading Works

When you place an order to buy a stock, the exchange matches your order with someone willing to sell at that price. This happens electronically in milliseconds. The exchange acts as the intermediary, ensuring both sides fulfill their obligations.

Trading Hours

Each exchange operates during set hours. The NYSE, for example, is open Monday through Friday, 9:30 AM to 4:00 PM Eastern Time. Outside these hours, limited "pre-market" and "after-hours" trading may be available.

Listing Requirements

Companies must meet specific financial and regulatory standards to be listed on an exchange. These include minimum revenue, market capitalization, and reporting requirements. Being listed provides credibility and access to a large pool of investors.

The Role of Regulation

Exchanges are regulated by government agencies (like the SEC in the United States) to protect investors, ensure fair trading, and maintain market integrity.