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What is a Stock Exchange?

Stock Exchange is a place where exchange of shares takes place. Many, around 20+ exchanges like National stock exchange (NSE), Bombay stock exchange (BSE), Hyderabad exchange (HSE), Calcutta exchange (CSE), Delhi exchange (DSE) etc., exits in India. In simple for explanation purpose, exchange is similar to a film theatre where the same film is being played in 2 different theatres (same stock trading in 2 different exchanges). Its totally the trader’s/investor’s wish in which they have to trade. Every company which needs to be traded in particular exchange must be listed. Respective listed company has to pay annual charges to the respective exchange. Same company can be listed in any number of exchanges fulfilling their criteria.

The reason for which the same company needs to register in more than one exchange is liquidity, allowing traders from different markets to buy and sell at ease. For this, I would like to go with an example assuming there are two fruit markets ‘A’ and ‘B’. Any company which enters in to the market to sell their product will obviously looks forward to sell in both the markets instead selling in just ‘A’ market and asking customers to buy only from market ‘A’. Later case may result in loss of business due to less number of buyers and sellers while the former one eases the customers of ‘A’ and ‘B’ to buy at ease.

But if you ask me which exchange you have to choose, once again I would suggest you to enter in to the market where more number of buyers and sellers turn around. so if the same scrip is listed in two exchanges, NSE/BSE and a local exchange, its always better to enter in to NSE or BSE rather entering in to a local stock exchange due to the above reasons. Two major exchanges in India are NSE and BSE.

Summary of this article:

Stock Exchange is the place where exchange of shares take place.
Good exchanges are those which has high liquidity.
Traders can opt any exchange they wish to trade.
Famous exchanges in India are NSE and BSE.
Around 25 exchanges are registered in India

Posted By: Ajay Goenka (Analyst)                 Posted on: 2016-04-13 15:41:26                 Updated on: 2016-04-13 15:41:56