SECONDARY MARKET & STOCK EXCHANGE:

The market for the purchase and sale of existing securities within the regulatory framework prescribed by SEBI

Functions of a Stock Exchange

  1. Contributes to Economic Growth Instead of investing money in an unproductive sector like jewelry stock exchange provide avenues for investment in the securities market and help in capital formation and economic growth.
  2. Liquidity and Marketability to Existing Securities: By converting the securities into the cash stock exchange provide a ready market for the investors. This provides both liquidity and easy marketability to already existing securities in the market
  3. Allow Pricing of Securities: Share prices on a stock exchange are determined by the forces of demand and supply. Such a valuation provides important instant information to both buyers and sellers in the market.
  4. Scope for Speculation: Provides scope within the provisions of law for speculative activity in a restricted and controlled manner to ensure liquidity and price continuity in the stock market.
  5. Spreading of Equity Cult: Plays an essential role in ensuring wider share ownership by regulating new issues, better trading practices, and taking effective steps in educating the public about investments.
  6. Ensures better allocation of capital: - Reliable companies whose shares have high value can raise the additional fund in the capital market by gaining the faith of the investors
  7. Safety of Transaction: The membership of a stock exchange is well regulated and its dealings are well defined according to the existing legal framework. Investing public gets a safe and fair deal on the market.

DIFFERENCE: