A stock exchange may be simply defined as a market where buyers and sellers of securities, that is, stocks, shares, and debentures, meet to make transactions. In New Zealand there are, at present, five exchanges -Auckland, Wellington, Christchurch, Dunedin, and Invercargill – all of which are affiliated in the Stock Exchange Association of New Zealand. This association makes the regulations controlling the dealings of members of the exchanges, that is the sharebrokers, both with the public and amongst themselves.
In addition to providing a market for the purchase and sale of securities, the stock exchange, as a major institution in the capital market, plays a role in the economy's development and growth. A necessary though not, of course, sufficient condition for the sustained development and expansion of productive facilities is a method of mobilising small, individual holdings of funds into amounts that can be used to assist in financing capital expenditures. By providing facilities for their clients to invest quite modest amounts in the loans of local bodies or the Government, and in the issues of share capital by new or established companies, members of the exchange perform a service the value of which cannot be precisely calculated but which is nonetheless, substantial. Stock exchange members also perform a number of other functions. Besides acting as agents for the buyers and sellers of securities, they advise both companies who wish to raise funds and individuals who are looking for an investment. They are often able “to place” share issues and act as underwriters for large public issues of shares.