exchange, mutual transfer of goods, money, services, or their equivalents; also the marketplace where such transfer occurs, such as a stock exchange or a commodity exchange. In early human society, exchange of unessential articles, such as jewelry, was common, but no group could afford to rely on another group for the necessities of life. Gradually, division of labor led to the barter economy, in which articles were produced for exchange. Modern capitalistic society, although an outgrowth of the exchange economy, is no longer based on exchange. Strict exchange depends on barter; in modern society the money and price system—in which goods and services are produced in exchange for specified amounts of a standard currency—has largely replaced barter, except for limited arrangements done on a local basis (such as within a town or village). Broadly, the term is now used to signify exchange of goods and services for money. The price of the various factors in exchange is determined by their supply and market demand. Conversion of one country's currency into that of another by means of still others is called arbitrage or arbitration of exchange. The term exchange also refers to the amount of money necessary to buy a given amount in a foreign country, usually for the foreign exchange of goods.

See H. E. Evitt, Exchange and Trade Control in Theory and Practice (4th ed. 1960) and A Manual of Foreign Exchange (7th ed. 1971); E. Sohmen, Flexible Exchange Rates (1961, rev. ed. 1969); S. W. Arndt et al., ed., Exchange Rates, Trade and the U.S. Economy (1985).

or stock market or(in continental Europe) Bourse

Organized market for the sale and purchase of securities (see security) such as stocks and bonds. Trading is done in various ways: it may occur on a continuous auction basis, it may involve brokers buying from and selling to dealers in certain types of stock, or it may be conducted through specialists in a particular stock. Some stock exchanges, such as the New York Stock Exchange (NYSE), sell seats (the right to trade) to a limited number of members who must meet eligibility requirements. Stocks must likewise meet and maintain certain requirements or risk being delisted. Stock exchanges differ from country to country in eligibility requirements and in the degree to which the government participates in their management. The London Stock Exchange, for example, is an independent institution, free from government regulation. In Europe, members of the exchanges are often appointed by government officials and have semigovernmental status. In the U.S., stock exchanges are not directly run by the government but are regulated by law. Technological developments have greatly influenced the nature of trading. In a traditional full-service brokerage, a customer placed an order with a broker or member of a stock exchange, who in turn passed it on to a specialist on the floor of the exchange, who then concluded the transaction. By the 21st century, increased access to the Internet and the proliferation of electronic communications networks (ECNs) altered the investment world. Through e-trading, the customer enters an order directly on-line, and software automatically matches orders to achieve the best price available without the intervention of specialists or market makers. In effect, the ECN is a stock exchange for off-the-floor trading.

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Any of a wide variety of synthetic polymers containing positively or negatively charged sites that can interact with or bind to an ion of opposite charge from a surrounding solution. Light, porous solids in granules, beads, or sheets, they absorb the solution and swell as they attract the target ions; when exhausted, they are removed from use and regenerated by an inexpensive brine or carbonate solution. A solid support of styrene-divinylbenzene copolymer to which are attached sulfonic or carboxylic acid groups is often used to attract and exchange cations (e.g., ions of hydrogen or metals). Quaternary ammonium groups on the solid matrix are used to attract anions (e.g., ions of chlorine). Industrially, the resins are used to soften hard water, purify sugar, and concentrate valuable elements (gold, silver, uranium) from their ores. In the laboratory they are used to separate and concentrate substances and sometimes as catalysts. Zeolites are minerals with ion-exchange properties.

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Transfer of goods or services that, although regarded as voluntary by those involved, is part of expected social behaviour. First studied by Marcel Mauss, the gift-exchange cycle entails obligations to give, receive, and return, each phase being surrounded with sanctions and calculations involving prestige and the maintenance of social relations. Some sacrifices may be viewed as gifts to supernatural powers from which a return in the form of aid or approval is expected; and the transfer of women in marriage between kin groups usually involves social obligations similar to those found in gift exchange. Seealso potlatch.

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Organized market for the purchase and sale of enforceable contracts to deliver a commodity (such as wheat, gold, or cotton) or a financial instrument (such as U.S. treasury bills) at some future date. Such contracts are known as futures and are bought and sold in a competitive auction process on commodity exchanges (also called futures markets). The largest futures and futures-options exchange is the Chicago Board of Trade.

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Price of one country's money in relation to another's. Exchange rates may be fixed or flexible. An exchange rate is fixed when two countries agree to maintain a fixed rate through the use of monetary policy. Historically, the most famous fixed exchange-rate system was the gold standard; in the late 1850s, one ounce of gold was defined as being worth 20 U.S dollars and 4 pounds sterling, resulting in an exchange rate of 5 dollars per pound. An exchange rate is flexible, or “floating,” when two countries agree to let international market forces determine the rate through supply and demand. The rate will fluctuate with a country's exports and imports. Most world trade currently takes place with flexible exchange rates that fluctuate within relatively fixed limits. Seealso exchange control, foreign exchange.

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Governmental restrictions on private transactions in foreign money or claims on foreign money. Residents are required to sell foreign money coming into their possession to a central bank or specialized government agency at exchange rates set by the government. The chief function of most systems of exchange control is to maintain a favourable balance of payments. Seealso foreign exchange.

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Direct exchange of goods or services without the use of money or any other intervening medium of exchange. Barter is conducted either according to established rates of exchange or by bargaining. Barter is common among preliterate societies, particularly in those communities with some developed form of market. Goods may be bartered within a group as well as between groups, although gift exchange probably accounts for most intragroup trade, particularly in small and relatively simple societies. Seealso currency.

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Short-term negotiable financial instrument consisting of a written order addressed by the seller of goods to the buyer requiring the latter to pay a certain sum of money on demand or at a future time. Bills of exchange are often used in international transactions, and the holder of such a bill may redeem it in cash immediately by selling it to a bank at a discount. Bills of exchange used in domestic transactions are sometimes called drafts. Seealso promissory note.

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U.S. regulatory commission established by Congress in 1934. Its purpose was to restore investor confidence by ending the misleading sales practices and stock manipulations that had led to the stock market's 1929 collapse (see Stock Market Crash of 1929). It also prohibited the purchase of stock shares without adequate funds to pay for them, initiated registration and supervision of securities markets and stockbrokers, established rules regarding proxies, and prohibited unfair use of nonpublic information in stock trading (see insider trading). It also required that companies offering securities make full public disclosure of all relevant information. The discovery of fraudulent accounting practices among several large U.S. corporations brought demands for greater SEC oversight in the early 21st century.

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