A stock exchange is a public or private institution that allows the sale and purchase of securities (such as shares and bonds) or certain types of goods. The role of a stock exchange is to bring together those who want to buy and those who want to sell and help determine the price at which those who want to sell are ready to sell and at which those who want to buy are ready to buy. Prices are set according to the rules of supply and demand.
All international financial centers have their stock exchange where securities are traded. The largest stock exchange in the world – and probably the best known – is the New York Stock Exchange (NYSE), followed on the second place by the NASDAQ, an electronic trading platform on which mainly securities of the technology sector are traded. The main European Stock Exchange is the London Stock Exchange.
Commodity exchanges are less numerous. The best known is the Chicago Mercantile Exchange in the United States, where commodities and agricultural products such as oil, wheat, corn, sugar, cotton, cocoa and coffee are traded. The London Metal Exchange has specialized in the trading of industrial metals such as copper, aluminum and tin.
Private investors have no direct access to a stock exchange. If they want to buy or sell securities, they need to contact a bank or a specialized intermediary.
To give investors an idea of the evolution of stock prices, stock markets – and more often, specialized companies – calculate a range of market indices that reflect the price movements of the largest companies listed on a specific stock exchange.