STOCK EXCHANGE STOCK MARKET AND THEIR FUNCTIONING.
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Stock exchange, stock market and their functioning is one of the most crucial topics when it comes to investors and business. Here in this article, we are going to clear all the aspects of the stock market and how they function. Keep on reading the article if you are interested.
Collection of market and exchanges which involves the activities of selling and buying is known as stock market. With a defined set of regulations, these financial activities are performed through special institutions of formal exchanges or over the counter marketplaces. In our country there are multiple stock trading venues which allow the transaction of stock and other forms of securities.
Stock exchange and stock market are some of the most interchangeable terms which are used by people in this field. If one says that she trades in the stock market, it means that she is buying or selling equities of the stock exchange that is a part of the total stock market. Some of the most popular stock exchanges in world includes the New York Stock Exchange, NASDAQ and Chicago Board Options Exchange. The stock market involves exchange and trading of equities, stocks and other financial securities. Other derivatives may include exchange-traded funds, corporate bonds, derivatives based on stock currencies, commodities and bonds.
How does the stock market work?
The next question which arises in the mind of every stockbroker is how the stock market actually works. It is actually a place with zero to low operational risk that allows a secure and regulated environment of the market.
There different participants can transact in share and also in other eligible financial instruments. These markets actually act as a primary market and secondary market which have a defined set of rules stated by the regulator.
Through the process known as initial public offering, this primary market allows exchange of stock market by companies to issue and sell shares. This is actually a means to raise necessary capital from investors. The company actually divides itself into a number of shares and sells those parts of shares to public. To facilitate this process, the marketplace is constructed where the shares can be sold.
The holders are expected to hold their shares for preferred duration anticipating rise in share price and any potential income in the form of dividend payments. This stock exchange acts as a facilitator for the capital raising process.
Fee is received for the services from the company and the financial partners. Fair dealing in securities transactions, efficient price, liquidity maintenance, security and validity of transaction, support all eligible types of participants, investor protection, balance regulation are some key features.
Functioning-
The stock market charges a fee for the services and operates as a for profit institute. The revenues from the transaction fees are the primary source of income for this stock exchange. For each trade which is carried out on the platform, there is a specific amount of transaction fees which is charged from that stock exchange.
