Functions of Stock Exchange:
(i) Providing Liquidity and Marketability to Existing Securities: It gives investors a platform to disinvest and reinvest their securities and thus provides both liquidity and easy marketability to already existing securities in the market.
(ii) Pricing of Securities: The forces of demand and supply of shares determine the share prices on a stock exchange.
(iii) Safety of Transaction: The membership of a stock exchange is well regulated and its dealings are well defined according to the existing legal framework.
(iv) Contributes to Economic Growth: A stock exchange is a market in which existing securities are traded, which leads to capital formation and economic growth.
(v) Spreading of Equity Cult: The stock exchange plays a vital role in ensuring wider share ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments.
(vi) Providing Scope for Speculation: Speculative activities are performed within the provisions of law and under restricted and controlled manner.