A stock exchange is an organized marketplace where securities such as shares, bonds, and exchange-traded funds are bought and sold. One of its primary features is liquidity, which enables investors to buy or sell securities quickly at market prices. This ensures smooth transactions and reduces the risk of holding investments for long periods without buyers.

Another key feature is price discovery. Stock exchanges determine the prices of securities through the forces of supply and demand. Continuous trading and real-time data help reflect accurate market values. Transparency is also essential. Exchanges require listed companies to disclose financial information regularly, allowing investors to make informed decisions.

Regulation and investor protection are fundamental features. Regulatory authorities supervise exchanges to prevent fraud, insider trading, and market manipulation. Strict listing requirements ensure that only credible companies can raise capital from the public. Clearing and settlement systems further enhance safety by ensuring that trades are completed efficiently and securely.

Modern stock exchanges operate through advanced electronic trading platforms, enabling fast and automated transactions. They also use surveillance systems and circuit breakers to manage excessive volatility and maintain market stability.

Finally, stock exchanges promote capital formation and economic growth. By connecting companies seeking funds with investors looking for opportunities, they support business expansion and wealth creation. These features collectively make stock exchanges essential institutions in the global financial system.