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Stock Exchange

FUNCTIONS OF STOCK EXCHANGE


Easy Marketing: - The securities can be easily sold and purchased in the stock exchange. The investors know the market value of the securities. So they can invest money in desired securities and released cash whenever required.

Capital formation: - stock exchange creates the habit of saving and investing among the people. It leads to invest of funds in corporate and government securities. Thus, it contributes the capital formation.

Facilitates speculation: - stock exchange provides opportunities to the investor to speculate. Due to speculation the supply and demand of securities’ may be equalized.

Safeguarding for the investor: - The dealing in the stock exchange are governed by the rules of securities control act 1956. It protects the interest of investor through the enforcement of rules of the act.

Guidelines for new issue: - It provides guidelines regarding new issues of securities. It also guides the companies regarding the scheme of allotment of shares and debentures.

Listing of securities: - The companies is required to enlist their securities on the stock exchange, for getting them quoted. For the purpose, they have to follow the rules and regulation of the stock exchange. So, the stock exchanges influence the management and working of the company in the interest of the investor.

Evaluation of securities: - The stock exchange publishes the quotations of the securities regularly. It provides opportunities to the investor to evaluate their holdings at any time.

Provide the guideline to investor: - The transactions in the stock exchanges take place in full public view. The open competition and publication of prices of securities in the newspapers and other periodicals timely guidelines to the investors for shifting to more profitable securities.

Provide guidelines for prospective investors: - The stock exchange provides important economic information about the companies through its publication from time to time. It is very useful for potential investor for taking investment decisions.

Middlemen: - stock exchange plays a role of middlemen between the investors and companies which are the desire of raising capital. The companies get the listing facility credit standing and goodwill in the market. On the other hand, the investor gets the facility of marketability and liquidity which regard to their securities.
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