The global stock exchange is one of the most important places that companies exploit to sell their shares and get new investors. The stock market is also one of the sites that help in spreading and upgrading the national economy. An international stock exchange is an institution that provides organized stock trading and is the secondary market for companies.
Definition of the stock market
A stock exchange is an institution that provides stock trading, and it is the place where investors gather to buy or sell stocks. The exchange operates under a specific regulation that controls the investors in the exchange and market operations.
The stock market is the secondary market, and the primary market is where the company issues its shares. The purpose of the stock offering is the desire to attract additional capital to companies.
After the company issues the shares, some want to buy them or sell them (the buyers in the primary market). Therefore, these people meet on the exchange platform where the transactions are fair and orderly.
At present, the global stock market operates through a network of electronically connected exchanges. However, there are still physical location exchanges with trading floors.
stock market jobs
The main function of the stock exchange is the trading of stocks and shares, but it has other functions such as:
- Economic efficiency: The stock market also serves as a measure of economic efficiency, as analysts use the stock market to forecast the direction of many financial markets.
- Reliability of the company: The stock exchange determines the reliability of the company in which its shares are listed. There are criteria that the company must meet for its shares to be traded on the stock exchange.
- Safe Transactions: Any exchange that has a regulator controlling its operation.
- Money exchange: An exchange is a place where not only individual traders meet, but online brokers meet, so it is not possible to know who is buying or selling shares.
How are shares traded?
There are two markets where shares are sold: the primary market and the secondary market.
The primary market refers to the time when securities are issued through an IPO. The shares are offered to an initial group of general shareholders.
The secondary market: is called the stock market, where investors and traders can deal in shares, without including the issuing company.
Since investors do not interact with the company that placed the securities directly, the exchange acts as a conductor or platform that allows buyers and sellers to meet their needs.
And to deal with stocks on the stock exchange you need to apply to an advisor broker who represents your interests.
How to determine stock prices
The cost of shares depends on the principle of supply and demand. When the company is listed on the stock exchange and there is a buyer and seller of its shares. The company sets an average price that meets the required level at which the seller wants to sell the stock and the level at which the buyer is willing to buy it.
stock market players
The stock market in the stock market is shaped not only by traders but by other people who greatly influence market operations, such as:
- companies.
- Brokers.
- SEC (Securities Commission): It is the organization that controls price fairness, insider trading, and other regulations that can affect market participants.
- Online Investors: Online brokers represent the investors.
- Financial advisors.
- Mutual and retirement funds: These are organizations that manage the investments of others.
Stock exchange types
Different types of stock exchanges serve different goals:
exchange auction
It is the type of exchange where buyers and sellers offer their prices for the stock as in an auction. One example is the New York Stock Exchange. In such a system, investors communicate on the actual trading floor.
electronic exchange
Electronic exchanges have replaced auction exchanges. Such exchanges allow investors to conduct operations remotely and are considered faster, for example, the Nasdaq Stock Exchange.
Electronic Communication Networks (or ECNs)
It is part of the alternative trading systems. ECN connects buyers and sellers directly, greatly reducing transaction costs.
ECNs are mostly used by institutional investors.
The global stock exchange provides all the financial needs of large companies in the world, and it also provides financial support to increase the capital of companies and individual investors around the world.
