Stock exchanges were created as a venue for buyers and sellers to trade financial assets. As these exchanges became more sophisticated, the responsibility to ensure fair dealing, transparency, liquidity, validity, and routine disclosure of issuers have also been put on stock exchanges. Stock exchanges are the critical venue for equity trading, but not for the bond, derivatives, or foreign exchange markets.
Key learning objectives:
Understand the origin and purpose of a stock exchange
Identify the additional responsibilities of a stock exchange
Explain how bonds are traded and the reasons and implications of trading OTC
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