How stock exchanges work
A plain-language guide to what a stock exchange does, how a trade happens, and the world's major exchanges.
What is a stock exchange?
A stock exchange is a regulated marketplace where shares of companies are bought and sold. Companies list their shares there to raise money from investors; investors then trade those shares with each other. The exchange sets the rules, matches buy and sell orders, and publishes prices so everyone sees the same market.
How a trade happens
- You place an order with a broker, a licensed firm that has access to the exchange. A market order buys or sells at the best price available now; a limit order only trades at your price or better.
- The exchange matches orders. All buy and sell orders sit in an order book. When a buyer's price meets a seller's price, a trade happens and that becomes the latest price.
- The trade settles. Shares and money change hands a short time later. In the United States settlement takes one business day (T+1) since May 2024.
Indexes: the market in one number
An index tracks a basket of shares to show how a whole market is doing. Well-known examples are the S&P 500 and the Dow Jones Industrial Average (US), the Nasdaq Composite (US technology-heavy), the FTSE 100 (UK), the Nikkei 225 (Japan) and the KSE-100 (Pakistan).
The world's major stock exchanges
Hours are each exchange's regular session in its own local time. Exchanges also close for national holidays, and some take a lunch break.
| Exchange | City | Founded | Currency | Regular hours (local) |
|---|---|---|---|---|
| New York Stock Exchange (NYSE) | New York | 1792 | USD | 9:30–16:00 ET |
| Nasdaq | New York | 1971 | USD | 9:30–16:00 ET |
| London Stock Exchange | London | 1801 | GBP | 8:00–16:30 UK time |
| Euronext | Amsterdam, Paris and others | 2000 | EUR | 9:00–17:30 CET |
| Tokyo Stock Exchange | Tokyo | 1878 | JPY | 9:00–11:30 and 12:30–15:30 JST |
| Shanghai Stock Exchange | Shanghai | 1990 | CNY | 9:30–11:30 and 13:00–15:00 |
| Hong Kong Exchanges (HKEX) | Hong Kong | 1891 | HKD | 9:30–12:00 and 13:00–16:00 |
| National Stock Exchange of India (NSE) | Mumbai | 1992 | INR | 9:15–15:30 IST |
| BSE (Bombay Stock Exchange) | Mumbai | 1875 | INR | 9:15–15:30 IST |
| Pakistan Stock Exchange (PSX) | Karachi | 2016 (Karachi's exchange: 1947) | PKR | See psx.com.pk |
Stock exchanges and crypto exchanges compared
| Stock exchange | Crypto exchange | |
|---|---|---|
| Opening hours | Weekdays, set hours, closed on holidays | 24 hours a day, every day |
| Who can trade directly | Licensed brokers | Anyone with an account |
| Regulation | Strict, with investor protection | Varies a lot by country |
| Price limits | Many markets pause trading after big drops | Usually none |
| What you hold | Shares recorded in your name through your broker | Coins held by the exchange unless you withdraw them |
Check whether the US market is open now on our stock market hours page, or read how crypto exchanges work.
Frequently asked questions
What is the oldest stock exchange in the US?
The New York Stock Exchange, which traces its origin to 1792.
Can I buy shares directly from an exchange?
Not usually. Individuals trade through a licensed broker, which sends orders to the exchange.
What does T+1 settlement mean?
The shares and money change hands one business day after the trade.