Stock Exchange
A regulated marketplace where securities are bought and sold. Major exchanges (NYSE, Nasdaq, LSE) provide listing standards, matching infrastructure, and oversight that support deep liquidity.
What exchanges do
Several core functions:
- Order matching — connect buyers and sellers.
- Price discovery — establish current values through trading.
- Listing services — admit companies to public trading.
- Regulatory oversight of listed companies.
- Settlement infrastructure — ensure trades complete.
Without exchanges, public stock trading would be much less efficient.
Major US exchanges
The two dominant:
- NYSE (New York Stock Exchange) — older; hybrid floor-electronic.
- NASDAQ — fully electronic; tech-heavy.
Both list thousands of companies and handle massive daily volume.
Major global exchanges
Beyond the US:
- London Stock Exchange (LSE).
- Tokyo Stock Exchange.
- Shanghai and Hong Kong exchanges.
- Euronext — pan-European.
- Various national exchanges.
Combined global market cap exceeds $100 trillion.
How exchanges have evolved
Significant changes:
- Floor trading has largely disappeared except for specific high-touch transactions.
- Electronic matching dominates volume.
- Algorithmic and HFT activity is substantial.
- Dark pools and alternative venues handle significant order flow.
- Decimalization (2000-2001) reduced spreads.
- Direct market access allows institutional trading without traditional brokers.
Modern exchanges are very different from 1980s exchanges.
Trading hours
Standard US:
- Regular hours — 9:30 AM to 4 PM ET.
- Pre-market — 4 AM to 9:30 AM ET.
- After-hours — 4 PM to 8 PM ET.
Different exchanges in different time zones operate at different hours globally.
What individuals should know
For most retail investors:
- Exchanges are infrastructure — mostly invisible.
- Different exchanges for different securities.
- Trading hours affect when orders execute.
- Index funds trade through exchanges automatically.
For traders:
- Different exchange characteristics affect specific securities.
- Some securities trade on multiple exchanges.
- Trading platform choice affects execution quality.
Exchanges are the central infrastructure of modern equity markets. Their evolution from physical floors to electronic networks has made markets more efficient, more accessible, and more competitive — though it's also produced new forms of complexity around HFT, dark pools, and order routing.