What is a Stock Exchange?

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Stock Exchange is an organisation which is responsible to provide the market place or facility for the trading of stocks and shares.  In Malaysia, Bursa Malaysia Securities Berhad is the organisation which meets the two basic and complementary needs

1. A business need for raising funds
2. An Individual's or compay's desire to invest savings efficiently

The duties of the stock exchange are set out in S.11 of the CMSA 2007 include the following

1. It shall be the duty of the stock exchange to ensure, so far as may be reasonably practicable,  an orderly and fair market for securitities that are traded through its facilities
2. In performing this duties the stock exchange shall

1. act in the public interest having particular regard to the need for the protection of investors; and
2. ensure that where any interests that it is required to serve under any law
   relating to corporations conflict with the interest referred to in paragraph (1), the latter shall prevail.  

It shall be the duty of the exchange to take appropriate action as may be provided for under its rules for the purpose of monitoring or securing compliance with such rules.

• An exchange shall immediately notify the Commission if it becomes aware of–

1. any matter which adversely affects, or is likely to adversely affect, the ability of any relevant person to meet its obligations in respect of its business of dealing in securities or trading in futures contracts, including the ability ofany relevant person to comply with the minimum financial requirements as may be prescribed under this Act; or 
2.  any irregularity, breach of any provision of the securities laws or the rules of the exchange or approved clearing house, or any other matter which, inthe opinion of the exchange, indicates or may indicate, that the financial standing or financial integrity of any relevant person or of the chief executiveor directors of the relevant person is in question or may reasonably be affected.

• Without prejudice to subsection above, when an exchange reprimands, fines,suspends, expels or otherwise disciplines any of its relevant person, it shall, within seven days, give to the Commission in writing the following particulars:

(a) the name and address of the business of the relevant person;
(b) the reason for and the nature of the action taken;
(c) the amount of the fine;
(d) the period of suspension, if any; and
(e) any other disciplinary action taken.

• An exchange shall at all times have sufficient financial, human and other resources to ensure the provision of–

1. an orderly and fair market in relation to securities or futures contracts that are traded through its facilities; 
2. adequate and properly equipped premises for the conduct of its business; 
3. competent personnel for the conduct of its business; and
4. automated systems with adequate capacity, security arrangements and facilities to meet emergencies.

 In other words, a stock exchange must be able to provide adequate and properly equipped premises for the conduct of its business; it should also provide competent personnel, security arrangements and facilities to meet emergencies.

For Further Reading,

Bursa Malaysia Securities Berhad, CMSA 2007, Finance, Malaysia, Stock Exchange, Study Guides