Exchange

Quick definition An exchange is a regulated venue where securities are bought and sold. Unlike private trading platforms, exchanges are subject to regulatory oversight and maintain strict listing and conduct requirements. What it is Exchanges are the primary venues for public securities trading. The major US exchanges are NYSE and NASDAQ. Each exchange maintains an order book, publishes prices, and facilitates trading. Exchanges differ from ATSs (Alternative Trading Systems) in regulation and oversight. Exchanges are subject to extensive regulatory requirements, while ATSs operate with lighter regulation. Exchanges publish data and maintain order books; some ATSs operate as dark pools. Why it matters Exchanges are trusted institutions. A company listed on an exchange has undergone rigorous vetting and is subject to ongoing disclosure and governance requirements. This builds investor confidence. Exchanges also provide price discovery. Prices on exchanges are public and visible to all participants, so they are generally more reliable than prices on private platforms. Listing requirements To trade on an exchange, a company must meet listing standards. These standards include minimum financial thresholds (e.g., minimum market capitalisation, minimum shares outstanding), governance standards (independent board, audit committee), and continuous disclosure requirements. Practical example Apple is listed on NASDAQ. The listing means Apple has met NASDAQ's requirements and is subject to SEC oversight. Any investor can buy Apple shares via the NASDAQ order book. If a company fails to meet listing standards (e.g., falls below minimum capitalisation), the exchange may issue a warning or delist the company. Market surveillance Exchanges monitor for trading abuses like insider trading, manipulation, and fraud. They have authority to halt trading, investigate suspicious activity, and refer cases to the SEC. See also - Venue - Automated Trading System (ATS) - Listing Requirements - Market Surveillance