A Stock Exchange is a central place where securities like stocks and bonds can be bought and sold. It functions much like a marketplace that connects buyers and sellers who trade securities, which include shares of publicly held companies. The stock exchange ensures fair trading practices and transparency in transactions.

The trading on a stock exchange is only carried out by registered members who might be individuals or companies. The exchange can facilitate transactions for a variety of securities like stocks, bonds, and derivatives. Some well-known stock exchanges around the world include the New York Stock Exchange (NYSE), the Nasdaq, the London Stock Exchange (LSE), and the Tokyo Stock Exchange (TSE). In India, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are the most popular.

Prices of stocks on an exchange are set by supply and demand in the market as buyers and sellers place orders. Order flow and bid-ask spreads are other important concepts in the functioning of a stock exchange.