An exchange is a marketplace where financial instruments such as stocks, securities, commodities, and derivatives are traded. The core function of exchanges is to ensure that trades are conducted fairly and efficiently and that price information is disseminated. Exchanges provide companies, governments, and others with a platform from which to offer securities to investors.
A trading venue can be either a physical location where traders come together to conduct business or an online platform. They’re also called a share exchange or “bourse” depending on where they are located. Exchanges are located throughout most countries worldwide. There are several major stock exchanges including the New York Stock Exchange, the Nasdaq, the LSE, and the TSE.
Trading has become completely electronic in the last decade. Sophisticated algorithmic price matching can ensure fairer trading without requiring all members of a market to be physically present on the same trading floor.
Operations are usually performed using multiple exchange networks. Most trades are completed electronically without regard to a physical trading location. This process has led to an increase in high-frequency trade programs and the use of complicated algorithms by traders on exchanges.