Who trades on the stock exchanges?

The stock exchanges bring borrowers (companies, states, issuers) and lenders (investors) together. But not every person can execute orders directly on the exchange. So who transmits the trades?

Broker

For physical floor trading, this has always been done by licensed brokers or stockbrokers.

As service providers, they are the link between investors and the exchange. This is because private individuals cannot trade directly on the exchanges, but must realise their buying and selling intentions via a stockbroker.

Today, the term broker does not so much refer to a person at the stock exchange. Rather, it refers to an online service provider that offers a digital securities account and its own or third-party trading software for individual securities trading via its platform.

Investors

With the launch of the electronic trading system and the continuous digitalisation of the stock exchanges, floor trading is being replaced more and more.

Many stock exchanges have completely switched to (their own) electronic systems or only use floor trading for shares of smaller local companies. Thus, stock brokers are also slowly losing their importance. Investors  in https://exness-vietnam.asia/login/ have long been able to place orders themselves on the mostly digitalised stock exchanges via their online securities account or their children's junior securities account. Further processing at the stock exchange is then fully automated by the computer programme used there. A broker is no longer necessary here.

Companies and public institutions

Companies and public bodies that issue shares and bonds via the local exchanges represent the third part of the trading actors on the stock exchange. They are the capital borrowers and provide themselves with new capital through their own securities.

Unlike investors, however, they do not necessarily need an intermediary on the trading floor. To subscribe to new shares (i.e. to bring fresh company shares to the market), you can go directly to the stock exchange administration, which will admit the securities to trading after a strict examination of various criteria.

The stock exchange is the hub for securities trading. Similar to the classic marketplace, buyers can choose from the range of different traders the one that suits them best.

In addition to companies and state institutions, fund and finance companies as well as owners of securities who want to resell them also act as traders.

But what exactly does the stock exchange do? We briefly present its various functions!

Provision of trading software

One of the most important tasks of the stock exchange is, above all, to make securities trading technically and logistically possible.

Whereas in the past orders were passed on exclusively by stockbrokers on the trading floor, today private investors are provided with electronic software solutions by the stock exchanges to place buy and sell orders themselves via the online broker or custodian bank.

In general, securities trading is digitalised to the greatest possible extent. Floor trading, as we know it from films and television, is still practised mainly for small and medium-sized company shares.

Some regional stock exchanges, such as Stuttgart or Hamburg, realise their floor trading via trading software, which executes all orders fully electronically, but is still handled by stockbrokers. Even trading on the Frankfurt Stock Exchange is carried out exclusively electronically.

Above all through the digitalisation of the stock exchanges, buyers and sellers are coming together ever more flexibly and quickly. Even international trading on foreign stock exchanges such as the New York Stock Exchange (NYSE) is possible without problems for German investors with the right broker.