exchange

An exchange is a marketplace or platform where buyers and sellers trade assets, services, or information. Exchanges coordinate the transfer of ownership and payment, facilitate price discovery, and provide liquidity by aggregating demand and supply from participants.

In finance, an organized exchange lists financial instruments such as stocks, bonds, derivatives, and commodities. Exchanges operate under established rules, maintain a central order book or matching engine, and typically rely on clearinghouses to guarantee settlement and reduce counterparty risk.

Foreign exchange markets, or forex markets, trade currencies on a global, largely over-the-counter network of participants and electronic platforms. Commodity exchanges handle both physical and futures contracts for goods including agricultural products, metals, and energy.

Trading on exchanges occurs through order-driven systems or dealer networks. Price discovery arises from bids and offers, while execution, clearing, and settlement infrastructures ensure the transfer of assets and settlement of funds, often across multiple jurisdictions.

Regulation and oversight aim to ensure transparency, market integrity, and investor protection. Key participants include traders, brokers, market makers, listed companies, and clearinghouses, all operating under compliance regimes, reporting requirements, and safeguards against manipulation and risk.

The concept has ancient roots in merchant markets, with formal stock exchanges emerging in the early modern period. From the Amsterdam, London, and New York exchanges to today’s global electronic platforms, exchanges have evolved with technology and regulation.