Stock exchange
An exchange can support trading, liquidity and price discovery, while admission and continuing requirements govern the relevant market or segment. Different securities, services and participant arrangements can operate through an exchange group. Distinguish the operator, listing authority, regulator and issuers:they need not be the same institution. Primary issuance can raise company finance, but ordinary secondary trading transfers existing securities and normally pays the selling investor. Access and liquidity are not guaranteed for every issue, and an exchange’s reputation does not remove investment risk.
Worked example
After a company raises capital through a new issue, investors trade its existing shares on an exchange. Those later trades affect investors and price discovery but do not automatically supply additional cash to the company.
Common mistake
Equating every secondary-market trade with issuer fundraising or treating an exchange as identical to its regulator.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FM | Supporting | September 2026–June 2027 |