(i) Providing liquidity and market ability to exchange securities: 

(a) Stock exchange provides a central market where securities can be bought and sold. (b)Stock exchange gives investors the chance to disinvest and reinvest. 

(c) This provides both liquidity and easy marketability to already existing securities in the market. 

(ii) Pricing of securities: 

(a) Prices of securities are determined by the forces of demand and supply for the securities. 

(b) A stock exchange is a mechanism of constant valuation through which the prices of securities are determined. 

(iii) Safety of transactions: 

(a) In stock market only the listed securities are traded and stock exchange authorities include the companies names in the trade list only after verification of soundness of company. 

(b) For listing, companies have to operate within the strict rules and regulations. Even after listing, the company has to operate within the legal framework of stock exchange. This ensures safety of dealing through stock exchange. 

(iv) Contribution to economic growth: 

(a) A stock exchange is a market in which existing securities are resoled or traded. 

(b) Through this process of disinvestment and reinvestment savings get channelized into their most productive investment revenues. This leads to capital formation and economic growth.