Stock Exchange 101
What is a stock exchange?
A stock exchange is a marketplace where participants meet to buy and sell shares of stock. It provides a single, neutral location for everyone to come together to execute trades. In today’s market, virtually all trading occurs electronically across a number of different stock exchanges. The stock exchanges facilitate the matching of buyers and sellers in order to execute trades.
Who are the customers of a stock exchange?
Exchange customers are registered broker-dealers. Individual investors and institutions, such as mutual fund companies, do not connect directly to stock exchanges, but rather trade through their brokers, who connect to our exchanges and other exchanges to execute trades.
Stock Market Industry Landscape > How an electronic order flows through the market
Institutions and individual investors place orders with broker-dealers.
Orders from broker dealers arrive at the exchange and interact with each other.
Exchanges match buy and sell orders. They are required to execute the order at the best price, which may mean routing the order to another market.