What is Stock Exchange? Why it is necessary? How one can make use of it?
Answer:
A stock exchange, share market or bourse is a corporation or mutual organization which provides facilities for stock brokers and traders, to trade company stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities, as well as, other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a local & central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only & stock & share holders. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation).
There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that bonds are traded. Increasingly more and more stock exchanges are part of a global market for securities.
If you need more information and basic guides here are some best online trading websies offering free service,
http://online-trading1.blogspot.com/.
A stock exchange, share market or bourse is a corporation or mutual organization which provides facilities for stock brokers and traders, to trade company stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities, as well as, other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a local & central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only & stock & share holders. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation).
It is a place where equity shares of a listed company are traded. The buyers & sellers meet to sell or buy the stock. It regulates the transactions. You have to be a member in a Stock Exchange to take part in the trading. Otherwise you can approach a share broker to buy or sell shares.
Stock exchange is an organized market for the trading of stocks and bonds. Such markets were originally open to all, but at present only members of the owning association may buy and sell directly. Members, or stock brokers, buy and sell for themselves or for others, charging commissions for their services. A stock may be bought or sold only if it is listed on an exchange, and it may not be listed unless it meets certain requirements set by the exchange's board of governors. There are stock exchanges in all important financial centers of the world; the New York Stock Exchange (NYSE, in nearly continuous operation since 1792), which had a trading volume of $7.3 trillion in 1998, is the largest in the world. Tokyo, London, and Frankfurt also have major facilities, and Euronext, an inter-European exchange combining facilities in Amsterdam, Brussels, Paris, and other cities, is also significant.
By providing a centralized, ready market for the exchange of securities, stock exchanges greatly facilitate the financing of business through flotation of stocks and bonds. However, speculation in stocks can sometimes accentuate the instability of an economy. The reality of the Great Depression was emphasized by the stock market crash in 1929. The interstate sale of securities and certain stock exchange practices in the United States are regulated by federal laws administered by the Securities and Exchange Commission. Today, a large percentage of stocks are traded through such over-the-counter organizations as Nasdaq (National Association of Securities Dealers Automatic Quotations) and its European equivalent, Nasdaq Europe (formerly Easdaq). Through these organizations, many securities not listed on a major stock exchange may be traded by dealers using computer and telecommunications technology; in 1994, Nasdaq, on which many computer and other high-technology stocks are traded, surpassed the NYSE in annual share volume. After the deregulation of the British securities market in 1986, the London Stock Exchange saw a decline in business due to a new computerized market similar to Nasdaq.
Computer-driven trade has significantly affected the stock exchange. Computer and telecommunications technology, besides opening a wide market in over the counter dealings, has also given rise to trading on an international level. Personal computers and modems allow trading to occur around the clock (after-hours NYSE and Nasdaq trading began in 1999), and the securities trading on one major stock exchange can now significantly affect the trading on others. Many contend that the traditional manner of trading will eventually become obsolete. Technology also now allows for “day trading,” a high-risk business in which numerous computerized trades are made during a single day, with large gains (and large losses) possible..
From a Company's point of view :-
For listing of shares and sending results on Corporate Governance to the market
From Brokers point of view :-
A trading platform
An interface to guarantee settlement and accept counter party risks.
A smooth settlement of shares and funds - so that there is no liquidity crisis
A mechanism to resolve disputes arising between brokers and sub-brokers
A place where first hand information on Company results and performances are received (some times within 15 minutes of a board meeting)
From an Investors point of view:-
A place to knowing their rights
A dispute resolution mechansim
For getting information regarding market & verifying authenticity of their trades
For lodging complaints against defaulting brokers
For being able to recover money from defaulting brokers.
I hope I have answered you in short!
It is a place where securities can be bought and sold just like the general market place
analyst
Earn $5 on registration
www.inboxdollars.com/?r=mogili
http://moneytipz.blogspot.com
The answers post by the user, for information only, BAnswer.com does not guarantee the right.
Other Questions and Answers: