Why we need stock exchange?

Question

Why we need stock exchange?

nomi king 5 months 1 Answer 89 views

Answer ( 1 )

  1. Originally Answered: Why is stock exchange necessary?
    Hi,

    A Stock Exchange is basically a platform that allow stock brokers and traders to buy or sell the shares of a listed company, bonds, and other securities.

    Now the question comes that why it is necessary. There are a lot of reasons.

    The main reason is it helps in circulating the money in the market. “Circulating the money”, let me explain you how:When you buy the securities of a company you have to pay for it; that means you have done a transaction; that means the money is changing the pockets. The more money is circulated the more economy of the country grows. Hence, it indirectly helps the economy to grow.
    It helps the Government to generate revenue. You have to pay a lot of taxes while buying or selling the securities. It again indirectly helps to grow a Country’s economy.
    It provides ease of doing trading of securities. When stock exchanges are not there, it takes a lot of days to find the suitable buyer or seller. But after the establishment of stock exchange, you don’t have to find a buyer or seller, instead this work is done by the exchanges.
    It also reduces the number is betrayals done by the other party by not accepting their words. For example, You are agree to sell the shares of a company the a person after some days, the other person also agreed to it. But when the day comes to sell the other person changes his mind and now does not want to buy the shares. He in short, betrayed you by not buying the shares as per the agreement. This is not going to happen when trading with the stock exchanges.
    Last but not the least, it saves a lot of time and cost with the invent of Dematerialised form of shares. You can easily access and transact the securities, from anywhere, anytime in the world.
    Hence, these are some of the things for which it is necessary to have stock exchanges. It is necessary to have stock exchanges in the Country, many people earns their bread and butter because of it only.

    I hope you are satisfied with the answer. If not, please comment.

Leave an answer