Stock Exchange means any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying and selling or dealing in securities. 

The following are the important functions of stock exchange: 

1. Providing liquidity and marketability to existing securities: The basic function of a stock exchange is the creation of a continuous market where securities are bought and sold. It gives investors the chance to disinvest and reinvest. This provides both liquidity and easy marketability to already existing securities in the market. 

2. Pricing of Securities: Share prices on a stock exchange are determined by the forces of demand and supply. A stock exchange is a mechanism of constant valuation through which the prices of securities are determined. Such a valuation provides important instant information to both buyers and sellers in the market. 

3. Safety of Transaction: The membership of a stock exchange is well regulated and its dealings are well defined according to the existing legal framework. This ensures that the investing public gets a safe and fair deal on the market. 

4. Contributes to Economic Growth: A stock exchange is a market in which existing securities are resold or traded. Through this process of disinvestment and reinvestment, savings get channelized into their most productive investment avenues. This leads to capital formation and economic growth. 

5. Spreading of Equity Cult: The stock exchange can play a vital role in ensuring wider share ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments. 

6. Providing scope for speculation: The stock exchange provides sufficient scope within the provisions of law for speculative activity in a restricted and controlled manner. It is generally accepted that a certain degree of healthy speculation is necessary to ensure liquidity and price continuity in the stock market. 

7. Regulates company management: Listed companies have to comply with rules and regulations of concerned stock exchange authorities. Thus, stock exchanges put the burden on the company to have healthy practices. 

8. Price Stability: There are many operators who buy from a stock exchange where securities are cheaper and sell in other stock exchanges where the prices for the same securities are higher. This process is known as arbitrage. These operators bring about stability in the prices of securities among various stock markets. 

9. Capital Mobility: The trading of various securities enables an investor to move his funds from one sector to another or from one industry to another. Investors can divert their investments from less profitable enterprises to more profitable enterprises. 

10. Serves as economic barometer: A Stock Exchange is not only an indicator of the state of health of individual companies but also of the overall situation and economy as a whole. Even a small change in the internal environment of any company or in the political, economic and social environment of the country gets reflected in the prices of securities on the stock exchange.