Functions of the Stock Exchange

The following are the functions of the Stock Exchange:

• It provides a market for capital already invested in the form of shares, securities, bonds, debentures etc.
• It facilitates the transfer of investment from one investor to another.
• It serve as a means for disinvestment by accommodating the investors in distress. They can easily encash their holdings through it.
• It facilitates international investment and attract the foreign capital for investment in the economy.
• It maintains a high standard of commercial morality through the rigidity of the rates governing the market operations which creates among both the indigenous and foreign investor.
• The Stock Exchange does not function as a market for new capital but encourages of new capital into industrial and commercial concerns by providing readily indigenous and foreign investors.
• It provides necessary mobility and directs the flow of capital into profitable and successful industrial enterprises by regarding its flow into enterprises with less justification for development.
• It guides to prospective investors by rising trend of prices or falling trend of prices of certain shares and securities.
• It operates under certain rules which govern the transactions affected in it and, as such, the check of forged securities pursuing as guide is eliminated.