centralized market

Centralized Market: A Comprehensive Guide in 2022

What is Centralized Market?

A Centralized Market is a type of Financial Market in Which there are only one Central Exchange and there is no other Competition. And In this Centralized Market all the Transaction are go through this one Exchange only. Because of no Competition the Centralized Market enjoy Monopoly so the price declared or quoted by the Central Exchange is the final price at which the transaction is done. Investors have no other option to execute transactions from somewhere else.

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Characteristics & Features of Centralized Market

The Centralized market have following Features:

Monopoly Market

The Centralized market is a Monopoly market where there is no other exchange to executes or do buy and sell of the transactions. Because of the Monopoly Investors have to place buy or sell order at the price at which Central Exchange quote.

Easy Transactions or Business

Centralized Market are establish to make transactions flow easy and do more Business. Because there are no other exchange the Investors have no option to go for any other Exchange, So all the Business or Transactions of a Country is going through the Centralized Market or Exchange.

Predictable Market

As Centralized Market is only one Market so Investors have any idea of a particular stock price as there will be less movement in the stocks.

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The Popularity of Centralized market is not that much as compare to Decentralized Market because of blockchain and new Technologies.

centralized market

How Centralized Market works?

There are many Centralized market all around the World, But The Biggest Stock Exchange of the World New York Stock Exchange (NYSE) is consider as a Centralized Market. In NYSE all the buying and selling of stocks is going under through this exchange only. And Investors have to place Buying and Selling Orders at the price quoted by NYSE. In Centralized Market there is Transparency of Price that means the investors can make decision after seeing the quotes and prices in the market.

In Centralized Market the price is quoted or regulated by one Exchange only so there is more transparency for investors to do research about the stocks which they want to buy. In this type of market the risk for investors is low because all the transactions are go through that one exchange so the price fluctuation is low also the buyers and sellers are dealing with the exchange not with each others.

Major Centralized Market Around the World

The Major Centralized markets in the world are:

The Emergence of Decentralized Markets

Decentralized market is an opposition of Centralized market where there are two or more than two exchanges or market working. With the evaluation of new Technology like blockchain the Decentralized Market are emerging day by day as in Decentralized market it connects Buyers and Sellers Directly to execute there transactions. This Decentralized Markets are based on Computer and Technology so it is more convenient for buyers and sellers to trade.

Examples of Decentralized Markets are, Cryptocurrencies, NFTs, FOREX Trading etc.

Difference Between Centralized Market and Decentralized Market

Centralized MarketDecentralized Market
There is only one Exchange or marketThere can be two or more than two Exchanges or markets
The Buyers and sellers have to execute transaction through that once exchange onlyThe Buyers and Sellers can go for the other Exchange to execute there transactions
Prices are samePrices may be different on Both Exchanges
No direct transaction between Buyers and sellers There is direct transaction between buyers and sellers

Frequently Asked Questions(FAQs)

1. Are Stocks Centralized?

Ans: The World’s Biggest Stock Exchange New York Stock Exchange (NYSE) is Centralized so we can say the Stocks are Centralized.

2. What are Centralized Market?

Ans: The Centralized market is a type of Financial Market where there is only onc exchange or market to execute the transactions and there is no other competitor available in the market.

3. Centralized Market Examples?

Ans: The main Examples of Centralized Markets are

  • New York Stock Exchange (NYSE)
  • Tokyo Stock Exchange, Inc. (TSE)
  • Chicago Mercantile Exchange (CME)
  • Athens Stock Exchange (ATHEX)

4. Is NYSE Centralized Market?

Ans: Yes NYSE is an Example of Centralized Market.


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