What Is A Stock Exchange?
By definition, a stock exchange acts as a regulated marketplace connecting buyers and sellers of stocks and other types of financial securities including bonds and warrants. Stocks are initially listed on an exchange through an Initial Public Offering (IPO), which allows private companies to raise capital to support their business plans. A stock exchange also ensures liquidity of the stocks on it. People can buy, sell and trade the stocks listed on a stock exchange. The larger the stock exchange, the greater exposure, and liquidity it typically offers.
There are 60 major exchanges in the world, but 16 of them make up what’s known as the Trillion Dollar Club because they have at least one trillion dollars in market cap.
Here’s a look at the top 5
1. New York Stock Exchange – NYSE
The NYSE is far and away the largest stock exchange on the planet. a market capitalization of over US$30 trillion and with over 2,400 companies listed on its board. NYSE is like High Street in London or the Avenue des Champs Elysées in Paris. It’s the place to be when you’re a large company looking to be listed on a stock exchange. In order to be listed on the NYSE, you need to meet certain requirements, like having a share price greater than $4 and a market cap of at least $40 million.
The NASDAQ (National Association of Securities Dealers Automated Quotations) is the second-largest stock market in the world in terms of market capitalization, and like the previous one, it is located in New York, in the iconic Times Square. Home to approximately 3,900 companies, NASDAQ-listed companies have a combined market capitalization of nearly US$12 trillion. When the NASDAQ opened, it was the world’s first electronic stock market – where buyers and sellers are connected by computers.
3. London Stock Exchange (LSE)
The London Stock Exchange was founded in 1801, which makes it the oldest stock market in the world. The market capitalization of close to £4.4 trillion (US$5.8 trillion) and its headquarters is at Paternoster Square in London.
4. Tokyo Stock Exchange (TSE)
5. Shanghai Stock Exchange (SSE)
Headquartered in Shanghai, this stock exchange is one of two independent stock exchanges in China, the other located in Shenzhen.
Due to tight capital controls in the country, this exchange isn’t completely open to foreign investors and the index used to reflect its performance is known as the Shanghai Composite Index. The SSE has 1,366 listed companies on its board with a combined market value of RMB33.6 trillion (US$5.05 trillion).
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