A securities exchange is a centralized marketplace where various financial instruments, such as stocks, bonds, commodities, and derivatives, are bought and sold. These exchanges serve as platforms where investors, traders, and institutions can execute transactions, providing liquidity and price transparency to the market.

The primary function of a securities exchange is to facilitate the trading of securities between buyers and sellers. It acts as an intermediary, matching buy and sell orders to ensure efficient and orderly transactions. By bringing together a large number of buyers and sellers, exchanges enable price discovery, determining the fair market value of securities based on supply and demand dynamics.

Securities exchanges play a crucial role in the global economy by providing a mechanism for companies to raise capital through the issuance of stocks and bonds. By listing their securities on an exchange, companies gain access to a broader pool of investors, increasing their visibility and credibility in the financial markets.

Furthermore, securities exchanges contribute to market efficiency and stability by implementing rules and regulations that govern trading activities, ensuring fair and transparent transactions. They also provide valuable market data and information, allowing investors to make informed decisions about their investments.

Overall, securities exchanges are essential components of the financial system, facilitating the flow of capital and enabling economic growth and development.