Securities are usually traded fairly freely on the market. Owners of shares, bonds and derivatives of financial instruments have the opportunity to dispose of them at their discretion. Over time, a need arose in society to streamline operations with paper assets. It was for such purposes that special institutions were created that brought together buyers and sellers of securities, which became known as stock exchanges.
The stock exchange is, as a rule, a joint-stock or state-owned organization that provides premises for settlements and information services when making transactions with a wide variety of securities. At the same time, the exchange regulates the activities of market participants, providing them with certain guarantees and receiving a commission for its intermediary services.
Today, in most industrially developed countries, the bulk of long-term investment is carried out precisely with the help of the stock exchange. The price of shares, that is, speaking in a professional language, their rate, is determined by the ratio of supply and demand. The market value of securities is constantly fluctuating, which makes it possible for market participants to make a profit when making purchase and sale transactions.
The role of the stock exchange is determined by the fact that the operations carried out on them contribute to the attraction of funds and their redistribution between the most diverse spheres of social production. Market indicators used in the practice of stock exchanges serve as a kind of "barometer" that allows you to catch trends in the development of the world economy.
Stock exchanges actually temporarily combine the free funds of the population and enterprises and move them between the subjects of economic activity. At the same time, maximum transparency of trading operations is ensured and arbitration support is guaranteed in case of disputable situations. To a certain extent, a set of ethical standards, which is a certain code of conduct for exchange trading participants, is a guarantee of fair transactions.
To an inexperienced outside observer, this may seem incredible, but the exchange provides an opportunity for its participants to earn both on an increase in the value of shares, and on a decline. There is a so-called "bull" market, when stocks rise in value, and a "bear" market, in which securities lose value. Investors, referred to in professional jargon as “bulls”, are betting on a rise, while “bears”, on the contrary, rub their hands happily when they hear another informational message about the stock market crash.
The largest stock exchanges are located in New York, Paris, London, Tokyo and Frankfurt am Main. There are several stock exchanges in Russia, with the largest trading floors being the Moscow Exchange, which emerged after the 2011 merger of the MICEX and the RTS, and the St. Petersburg Exchange.
