Functions of a stock exchange
Enables capital to be raised the government issue of debt and industry (issue of securities).
Provides a secondary market through which existing securities can be bought and
sold shareholders and long-term debt owners (liquidity and marketability)
Advertises security prices enabling the investors and the public to follow progress or otherwise of their investments and to channel their funds into what they perceive to be profitable enterprises.
Protects investors against fraud. Where fraud is suspected, the dealing is suspended.
Serves as an economic barometer of the fortunes of government and enterprises. The stock index indicates prospects of quoted companies and of the economy as a whole.
Pricing of securities
Commercialization and privatization of firms.