A stock market is a secondary market where existing shareholders can trade with potential buyers. On a regular basis, stock exchange-registered corporations do not sell or buy their personal shares. A company may buy back its own stock or issue additional shares, but this isn't something that happens every day and is often done outside of an exchange's structure. When you buy stock on the stock market, you're not actually buying it from the company, you're actually buying it from a shareholder. When you sell your stock, you don't return it to the company; rather, you give it to another investor.

A stock exchange is a centralized marketplace where financial instruments, primarily stocks and securities, are bought and sold. It serves as a platform for companies to list their shares for public trading, enabling investors to buy and sell ownership stakes in these companies. Stock exchanges facilitate the liquidity of investments, providing a transparent and regulated environment for trading. Key exchanges, such as the New York Stock Exchange (NYSE) and NASDAQ, employ electronic trading systems, matching buyers with sellers in real-time. The exchange's role extends beyond mere transactions, as it establishes fair market values, enhances transparency through publicly available price information and ensures compliance with regulatory standards. Investors, ranging from individuals to institutional entities, participate in stock exchanges to build diversified portfolios, capitalize on market opportunities, and contribute to the broader dynamics of global financial markets.