What is a stock exchange

The stock exchange explained simply

What is the stock exchange?

The Stock exchange is a marketplace where goods and goods such as securities, raw materials, foreign exchange or derivatives are traded in a regulated environment. In English one speaks of theStock Exchange.

  1. New York Stock Exchange (also known as Wall Street)
  2. BATS Exchange (Multilateral trading system)
  3. Nasdaq (largest electronic exchange in the USA)

The Deutsche Börse AG is the 12th largest exchange in the world. It operates the Xetra and Frankfurt Stock Exchange trading venues and, with Eurex, one of the largest futures exchanges in the world.

The most important type of exchange today isStock exchange. A stock exchange is the trading place for securities such as stocks, bonds or funds.

Other Exchange types are: the foreign exchange exchange, the commodity exchange and the futures exchange.

The history of the stock exchange

The stock exchange has existed since the 16th century. The name comes from the van der Beurse family of Belgian merchants. The family held regular meetings with Italian merchants at their home in Bruges.

How does exchange trading work?

How is a stock market price created?

In an exchange, buyers and sellers meet. The price of a traded good is through supply and demand certainly. If the demand is high, the price rises. If the supply is high, the price goes down. The stock exchange price is a reflection of past prices.

Stock market price explained simply (4:41 min)

What is a broker?

A broker, also known as a stockbroker, is responsible for executing securities orders from investors. As a private investor, you cannot trade stocks or other securities without a broker.

The broker receives a commission for the transactions, the so-called brokerage fee. This fee differs depending on what other services the broker offers.

Online brokers are an inexpensive and recommendable alternative compared to house banks. Private investors in particular who do not need a branch network or advice can reduce fees by using online brokers.

What is a depot?

To be able to trade on the stock exchange, you need a securities account, in shortdepot. A custody account is used for the safekeeping and administration of securities. You can, for example, place an order to buy or sell a share via the deposit.

"Depot" is a French word and means "warehouse". Before digitization, physical securities were handed out. These were stored in a safe place, the depot, after they had been handed over.

Today, the custody account can be viewed digitally on the website of its custodian bank and contains information on purchases and sales made and the company's own securities portfolio.

How does an IPO work?

The initial public offering, also called IPO (Initial Public Offering), is a way for a stock corporation to raise money. When the company goes public, shares are sold.

Company shares that were previously privately owned become the Publicity made accessible.

There are strict legal requirements for going publicRegulations. The stock market maturity is checked and you have to publish company information regularly through official channels.

The biggest IPO ever

On September 19, 2014, the Alibaba Group achieved what is currently the largest IPO. Alibaba was able to raise funds totaling nearly 25 billion US dollars through the IPO.

Process of an IPO (5:55 min)

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