If a business requires lots of investment, and the founder don’t have enough fund to start the business, then he can go for stock market. The founder can raise funds for his investment through stocks. Stock exchange is an organization or an entity which acts as mediator between stock brokers and the business. A person can buy shares only through stock brokers. Stock Exchange provides the traders to buy both shares and securities. Stock exchange can be termed as one of the main component in this stock market industry.

Securities can be of bank notes, bonds or equities. Stocks exchanges are also responsible for issuing stocks and paying dividends to the stock holders. If a security needs to be traded through stock exchange, then it should be listed in the stock exchange prior. Every stock exchange has a centralized office where all the major activities happen.

Before the advent of internet banking, trading used to happen in the centralized stock trading office only and it would be the happening place in the city. In modern market, with the facilities of internet banking and online trading facilities, a trader is not required to visit stock exchange to buy shares. Shares can be bought with a few clicks away.

The stock exchange defines the trading in two phases: primary market and secondary market. Primary market refers to initial issue of stocks and bonds. Declaring the face values and the number of shares are done here. Subsequent trading activities happen in secondary market. This refers to selling shares and providing dividends.

During 11th century, a group of people traded on behalf of banks by moderating between agricultural communities and the bank. These people can be declared as first brokers. Venetian bankers started trading with government bonds during 13th century. Later in 16th century, the concept of stock arose. The Dutch East India Company introduced shares. They issued shares for Amsterdam Stock Exchange. On 1817, New York Stock and Exchange board was established by a group of brokers.

The main role of a stock exchange is to act as a mediator between the business needs and the trader. They directly or indirectly affect the global economy. Some of the roles of the stock exchanges are:

1. Provide an opportunity for companies to raise funds for starting the business.
2. It helps the companies to increase their product line. More investments help in more growth. The companies can get funds to introduce new products to the market and thus ultimately increase the profit.
3. Stock exchange shares the profit between the business and the share holders. If a company decides to provide dividends to its share holders, then it should go through stock exchange.
4. Stock exchanges act as one of the investment option for common people. They try to bring out profit from idle money.

For a company to enter into the stock exchange, they have to meet certain requirements designed by the stock exchanges. Some of the conditions are the number of share, capital amount of the business and minimum guaranteed annual income.