Glossary
Stock exchange
A regulated marketplace where buyers and sellers trade listed securities, such as the NYSE and Nasdaq.
A stock exchange is an organized market that matches buy and sell orders for securities under published rules, and that lists companies whose shares meet its standards. In the US, exchanges register with the SEC as national securities exchanges and must enforce their own rules on members. The best known are the New York Stock Exchange and Nasdaq, but more than a dozen registered exchanges, run by a handful of operators plus a few independents, now compete for the same orders.
What an exchange does
- Matches orders. Each exchange keeps an electronic order book and executes trades by price, then time priority, during its sessions.
- Lists companies. Listing requires minimum share price, market value, shareholder count and governance standards; falling short can lead to delisting.
- Publishes prices. Quotes and trades feed the consolidated tape, from which the national best bid and offer is computed.
- Runs auctions. Opening and closing auctions set the official open and close, and reopen trading after halts.
Not all trading happens on exchanges
A large share of US stock volume, at times close to half, executes away from exchanges: in dark pools, through wholesale market makers that handle retail orders, and in other alternative trading systems. Those trades are still reported to the tape, but they do not interact with the public order book in the same way.