Understanding the Share Market

"The stock market" is given the name of the brokerage of the broker who do business together. The stock markets bring buyers and sellers of shares or bonds.

An established company ("Exits") represents shares of the Company's property. Shareholders know that the value of their shares fluctuates on the value of the assets of the company and the business outlook of its activity fluctuates.

In almost all cases a company developed its actions to enable resale and negotiation. The first time you sell a certain share of the shares when the company is issued and sold.

This is called the primary distribution. However, all subsequent operations of the same shares, issued above, are called transactions on the secondary market. This type of transaction transfers the property from one person to another, without the company that originally issued the action.

The popular image of the stock market is trading on the secondary market. Transactions on the secondary market through "exchange" or formally organized by a network of brokers "over the counter" (OTC).

The primary sale of shares, on the other hand, is usually done through "trade unions" of investment banks (see investment banking) and retail brokerage firms directly contact potential buyers of the new offer. The volume of stock trading "old" far above the original sale of shares "news".

Trade

An exchange decides the securities (shares and bonds) and contracts (see trading options and futures) that you would like to exchange. First, the exchange plans to organize a "market" value or negotiate a single contract; Shares, this step is the "list" of the population.

Most exchanges will not be the list of the actions of a company that does not meet the minimum standards set for the use of individual exchange. An exchange can also decide to "cancel" an action after the company does not meet its standards for some time. More replacement can be the same vehicle list.

An exchange is a private organization. Which members can be individuals or companies are responsible for the organization and the integrity of the financial markets. The main advantage of membership is direct access to trading systems and support; All non-members must agree to negotiate for a member to negotiate on their behalf. The correspondence of limited membership, but allows a member to sell your membership to another person or to sell.

An essential feature of a market exchange is promoted by the provision of "market" services. Market makers are willing to buy a price they are willing to sell, a "price" (bid) and the price they are willing to sell a "demand" (price).
The difference between demand and the "difference between supply and demand" -providing - is a measure of the cost to the customer to operate the market. In general, a well-functioning market in which the commands can be executed quickly, at prices that reflect a narrow range of supply and demand.

Most pockets assign the rights of every stock market to a "specialist", which is mainly responsible for the operation of this market. A specialist is always willing to quote bid and sell immediately and negotiate them. The specialist also maintains a "book" of orders placed by others and carries out these orders, which changes in market prices.

Securities Transactions

The public can use the foreign exchange markets by creating an account with a broker who is a member of the trade (or trading through another company that is a member of the trade).

A client can offer your broker a long list of instructions when and at what price, but all in all, the clients have two types of orders: limit orders and market orders. A limit order has the broker to buy (or sell) only at a price no more (or less) than the limit set by the customer. A market order tells the broker to execute the transaction immediately at any desired price.

The broker sends the customer to the exchange stock, either by phone or via a computer network. On the premises of the order is executed at the best possible price, which can be made available by a market maker or broker who provides another contracting authority. In the case of a limit order, if the offer prices and current sale are not satisfactory, the order will be placed at the tray on the left (or other market makers) for execution in the event of a price move.

Once trading is traded on the floor of a stock exchange, which is made by a company on the ground or counter counter market, the buyer must pay the action, and the seller must provide the buyer. These monitoring procedures are part of the "Shift" and "Approval".

Each exchange uses the services of a clearing house. The members of a clearing house are exchange members who accept the requirements and additional financial obligations imposed by the clearing house. All members of an exchange must be a member of the Clearingstelle or arrange by a clearing member of their operations to "clean".

At the end of the day, each clearing member issues the number of shares and per share sold and the prices at which transactions took place. Compensation companies to reconcile reports to all clearing members. The total number of buyers accurate totals provider reports when and whether all reports are complete and accurate reports.

"Authority" the payment and transfer of property. Most stock transactions are negotiated on the fifth working day after the trading is settled. However, transactions and futures options contracts are settled on the day of trading. Clearing member companies are responsible for the business of its clients settling time, even if customers do not provide money or qualification.

Customers hold a cash account or a margin account with their brokers. With a cash account, a customer must pay in full within seven working days; Without having to settle within seven days of buying a customer may have a cash account other obligations during your broker. A margin account, on the other hand, is designed to allow customers to have pending obligations, provided they hold the guarantee on the account as a good faith deposit.