An exchange facilitates the trading of assets between buyers and sellers by providing a transparent and regulated environment. It helps ensure that trades are conducted fairly and efficiently, often acting as an intermediary to match buy and sell orders. Exchanges can be physical locations, such as the New York Stock Exchange, or electronic platforms, such as the NASDAQ, where trades are executed digitally. In addition to providing a venue for trading, exchanges set rules and regulations to maintain market integrity and protect investors.
Exchange Example
For example, an investor wanting to purchase shares of Apple would place an order through a broker, and that order would be processed on an exchange like the NASDAQ, where buyers and sellers of Apple shares are matched.