What is a stock exchange?
5paisa Research Team
Last Updated: 06 Jun, 2025 11:44 AM IST

Content
- Understanding Stock Exchanges: How They Work and Why They Matter
- History of Stock Exchanges
- How Do Stock Exchanges Work?
- Types of Stock Exchanges
- What is the National Stock Exchange (NSE)?
- What is the Purpose of the Stock Exchange?
- Why Are Stock Exchanges Important?
- Role of Stock Exchanges in the Economy
- How to Buy and Sell Stocks on a Stock Exchange?
- Things to Consider Before Investing in Stock Exchanges
- Benefits of Listing with Stock Exchange
- Benefits of Investing in Stocks Through a Stock Exchange
- Risk of Investing in Stocks Through a Stock Exchange
- Examples of Stock Exchanges
- Conclusion
Understanding Stock Exchanges: How They Work and Why They Matter
A stock exchange is not just a place where shares change hands. It’s where capital meets opportunity. Investors look for returns, companies seek funding, and market forces do their quiet dance behind the scenes. Whether you are just getting started with investing or curious about how companies raise funds, it is important to understand stock exchanges.
In this article, we will understand the concept, its history, functions, and how you can participate with more confidence.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.
Frequently Asked Questions
Stock exchanges are crucial for the safe, regulated, and reliable buying and selling of stocks and securities. The Securities and Exchange Board of India controls the working of the Indian stock market. The financial watchdog works to establish investor safety in the stock market.
Per the stock exchange definition, there are twenty-three stock exchanges in India. The Bombay Stock Exchange and the National Stock Exchange are national stock exchanges. The remaining twenty-one is regional exchanges.
The Bombay Stock Exchange is the oldest in Asia. Launched in 1875 by cotton merchant Premchand Roychand, the BSE has a market cap of INR 24,474,952.86 crore (as of February 2023) and over 6,000 listed firms in its ecosystem.
Founded in 1992, the National Stock Exchange shines as the world’s largest derivatives exchange concerning the number of traded contracts. It was the first exchange in India to provide screen-based electronic trading to investors. The market cap of NSE stood at USD 3.4 trillion as of August 2022. The exchange supports more than 1600 registered companies on its platform.