Financial markets: trading venues: what is an exchange?
An exchange is a marketplace on which stocks and shares, and options and futures on stocks, bonds and commodities etc. are traded.
Types of exchanges
- Most exchanges specialise in a particular type of security, for example:
- Equities and debt instruments
- Derivatives, e.g. options, futures, swaps
- Commodities, e.g. oil, precious metals, grains
An exchange provides:
- liquidity in the market, allowing the trading of securities
- access for investors centrally to a wide range of securities
- integrity to the financial markets (due to their regulation)