What are the Functions of Stock Exchange
Main functions performed b stock exchange are as follows:
(1) Providing Liquidity and Marketability to existing securities: Stock exchange is a market place where previously issued securities are traded. Different types of securities are traded here on regular basis. Whenever required, investor can invest his money through this market into securities and can reconvert this investment into cash.
(2) Pricing of Securities: A stock exchange provides platform to deal in securities. Forces of demand and supply work freely in stock exchange. In this way, prices of securities are determined.
(3) Safety of Transactions: Stock exchanges are organized markets. Fully protect the interest of investors. Every stock exchange has its own laws and be-laws. Every member of stock exchange has to follow them and any member found violating them, his membership is cancelled.
(4) Contributes to Economic Growth: Stock exchange provides liquidity to securities. This gives investor a double benefit-first, benefit of the change in the market price of securities and secondly, in case of need for money they can be sold at the existing market price at any time.
(5) Spreading Equity Cult: Share market collects every kind of information in respect of the listed companies. Usually this information is published or otherwise in case of need anybody can get it from stock exchange free of any cost. In this manner, stock exchange guides the investors by providing various types of information.
(6) Providing Scope for Speculation: When securities are purchased with a view to getting profit as a result of change in their market price, it's known as speculation. It's allowed or permitted under the provisions of relevant Act. It is accepted that in order to provide liquidity to securities, some scope for speculation should be allowed. Share market provides this facility.