What is the main purpose of a stock exchange?

The main purpose of a stock exchange is to facilitate the buying and selling of stocks. Stock exchanges serve as platforms where investors can trade shares of publicly listed companies. They enable liquidity in the market, meaning that investors can easily buy or sell shares at market prices. This mechanism fosters transparency and provides a regulated environment for transactions, ensuring that trades are conducted fairly and efficiently.

In addition to trading, stock exchanges provide essential information about stock prices, trading volumes, and market movements, which help investors make informed decisions. By centralizing the stock trading process, exchanges promote market stability and investor confidence.

Issuing new stocks is typically managed through a different process called an initial public offering (IPO) and then subsequent offerings, which occurs through the underwriters and not directly by the exchange itself. Regulating interest rates falls under the jurisdiction of central banks and financial authorities rather than stock exchanges. While providing investment advice might occur in other contexts, it is not a primary function of a stock exchange.