What is the meaning of Stock market? Concept, Definition of Stock market


Concepts and meanings of stock market

Meaning of stock market

Stock markets are a type of capital market in which trading is equities and fixed income in a structured manner, through the sale of securities. It allows users the channelling of capital in the medium and long term investors
The set of rules and participants (issuers, brokers, investors and other economic agents) aims to allow the process of emission, placement, distribution and intermediation of values entered in the national register of securities or international can be deduced.
The stock markets are now automated and most of the operations are performed using the ECN (Electronic Communications Networks), which are simply a set of servers (computers) that contain the system or program where all buyers and all sellers virtually converge. Usually the brokers provide contributions using shares from their own inventory to sell them and buy them to its customers. Is for this reason that they are called "market makers" (market makers), because they are responsible for maintaining the liquidity of the same.
An "operator to detail" (retail trader) does not have access to the market itself, you need a platform (direct or indirect) for their securities operations. The brokers provide these platforms and charge customers a Commission for each completed transaction. On many occasions they also demand a monthly payment for the use of this platform. Not all brokers offer platforms with the ECN mode, but rather a kind of synthetic market where you buys and sells directly to the broker. This has the advantage that you will always pay for their actions the price that you see in the quote at the time of the transaction, but has the disadvantage that "difference" in the quote is usually much greater in comparison with the real market.

Definition of stock market

We should first define the stock market as a set of institutions and financial agents which are negotiating different types of assets (shares, funds, obligations, etc.) through instruments created specifically for this purpose. Its fundamental objective is the capture part of personal and business savings not for the simple fact make speculation but also to achieve a point of extra for business funding as occurs for example in the issue of new shares.
The fundamental objective of the securities markets is to some extent help the movement of capital thus contributing to monetary stability and above all to the financial. Democratically defined values markets use helps the development of monetary policies more active and safe.
Therefore the securities markets are places where agents through intermediaries and using the instruments specifically developed exchange assets between itself, facilitating the transparency and freedom of any citizen to make purchases or sales of securities.
Stock markets has a special feature that not give another type of markets to financial assets and is that they are able to fix the price of values, in order to the law of supply and demand of them. Another qualitative advantage is that you can be an investment type very fluid for many investors, since at any time you may have the option for example to sell your shares.
Within the stock market are going to make the distinction between primary and secondary market, as two types of engagement and negotiation completely different values:
Primary market: So called placement or placing on the market of new shares. Is they are from actions directly from the company and are usually sold through an auction, a public competition or direct negotiations. In the case of an indirect way (come into play financial intermediaries), can be carried out in three ways:
For sale • firm: a number of shares close firm by a specific amount, regardless of whether all sold or it is not a closed deal.
• Stand-By agreement: The issuing company and the intermediary close a pre-agreement, the intermediary carries out sales in several batches and as you need to expand the number the company is closing more shareholdings. This form is very common when there are several financial intermediaries who simultaneously manage these values.
• Best Effort: direct sale to Commission of intermediaries; both sold as much Commission are issuing company of these actions.
• Grey market: Is one of the most bizarre, since carried out using certain parts of the market that companies do not use regularly; They are not illegal, but hence its name from grey, by the knowledge of the real to be an untapped market result.
• Private placement: Shares issued and that are placed in private to one or several persons in a direct way but private market.
Finally note that the primary market is regulated at all times by their two governing bodies: the CNMV and the DGTPF. We must not forget that it is an issue of new shares to the market and that always has to go through the tutelage of both institutions for the good functioning of the same.
Secondary market: Therefore is that market where the securities already issued and sold in the primary market are simultaneous and publicly managed in real-time by buyers and sellers, for this run their operations either directly or through corresponding financial intermediaries markup in this way the actual values price.
As all types of assets that are freely traded on secondary markets previously is understandable to have passed by the market primary school, in its phase of issuance and placement, where its first buying and selling operation took place.
The secondary market is therefore the common place in which usually individuals perform the operations of purchase sale which, although they don't look it are that managed the economic fabric and financial productivity from a context of investment and confidence.
Ultimately the securities markets are those places where large amount of financial assets that are traded today on day in our economy are measured in reference to the target price and confidence that private investors have enterprises that sustain them.

Concept of capital markets

It is the one where public or private securities are traded. It is constituted by all financial institutions who channeled the supply and demand of financial loans to medium- and long term: banks, stock exchange and other financial institutions.
The capital market brings together borrowers and lenders, to grantees and applicants of titles new or issued previously. When it comes to short-term transactions often talk of a market of money, although there are conceptual differences or crisp practices between it and the capital market.
The existence of a vigorous capital market is essential for the economic development of a country, because it is through this that companies obtain the financial resources they need for their operations and that the savings of the people can be channeled towards productive activities.
• Allows the transfer of resources from savers, to investments in the productive sector of the economy.
• Efficiently provides resources to the financing of companies in the productive sector.
• Reduces the costs of selection and allocation of resources to productive activities.
• Allows the variety of risk for participating agents.

What is stock market

The stock market is part of designated capital market, which composed the means through which an economy determines and distributes resources, risks and research concerned so saving moves toward investment. However, it contains no credit market, while the two put their efforts in the medium and long term.
With greater clarity, it may indicate that stock market means the space where seekers and providers of securities securities made the transfer of resources from savers or agents with excess liquidity, investment in the lucrative sector of the economy.
Then teach certain advantages of the stock market:
• Fixed low-cost resources for the financing of companies in the productive sector, i.e. that it channels effectively saving into investment.
• Enables the variation in risk for agents partners.
• Consent to savers with surplus liquidity to participate in investment projects of medium-term of the economy, i.e. it transfigured the deadlines for the savings and investment.
• Provides an extensive multiplicity of products with different characteristics (term, risk, performance) according to the needs of the investment or financing of agents market partners.
• You have prospects lead to higher yields than those achieved in the credit market (an example of the credit market is the case of a saver who placed their savings in a Bank).
Today, the stock market consists of two markets. The first is it develops in the systems negotiate or transaction values, ordinarily directed by stock exchanges, known as stock market, and the second market is which operates is out of stock exchanges systems, referred to as market counter or OTC. One and one are inspected and monitored by public authorities, as the Financial Superintendent's Office of Colombia and private as the Colombian's securities authorities.

Meaning of stock market

Referred to as market to the institution of a social nature that arises when you start a link (also known as vendors) entreoferentes and eventualesdemandantes (i.e., buyers), which interact with the purpose to realize exchanges, transactions or agreements.
A value, on the other hand, is something that has an estimate. The term, economic or financial, is used as a synonym for title or action (to mention, in this context, the rights as the owner that someone holds in relation to a certain society).
Based on these definitions it may occur to the notion of market or stock exchange as a phrase describing the capital market that serves as a framework for establishing negotiations linked to pensions, both fixed and variable, through buying and selling operations focused on any negotiable value class.
Both the offerers and plaintiffs negotiate values (which can be between shares or securities obligations, among others) after accessing reliable information on States of societies. The operation of the stock market allows channeling elahorro and investment.
Issuers of securities obtained financial resources from the public offer, while those who buy these values can achieve profits either with the resale of the shares or through the payment of dividends (an amount that is paid in proportion to the titles owned with the profits generated by the company).
It should be noted that stock market employs various procedures and systems that guarantee their transparency. In this way, assumes that there will be no one who can make use of its power to distort the price of values. It is essential, therefore, that the information can circulate freely and be truthful.
The Tokyo Stock market is the second largest worldwide, and the largest in Asia, and is dedicated to exclusively negotiate the actions and values, both convertible as those who give the right to acquire or subscribe. To conduct their negotiations, is based on a "system of management and execution of orders computer-aided", known by the acronym CORES. More than 2 thousand companies from all over the world listed in it, no doubt highlighting technological and automobile. Among them are leaders in the manufacture of Honda and Toyota vehicles, powerful and multi-faceted Pioneer and Sony, manufacturers of components of electronic Kyocera, TDK and Fanuc, the leader in digital imaging, Canon and Secom security specialists.
In each country there is an institution dedicated to supervising the activities of the bag, as it is the case of Spain, for example, and its national the market of securities, which governed since 1988. In all cases, it has as its main objective ensure lalegitimidad of transactions and protecting investors. It is worth mentioning that the amount of data that must be scanned to carry out their activities is free access to citizens.
Speaking specifically of the Spanish CNMV, this body carries out an intense work of international character, which mainly consists of participating societies which meet those who regulate and monitor values, such as the international organization of securities commissions, and pools that span various sectors, such as insurance and banking services, both nationallysuch as continental and global.
On the other hand, their powers reach also counseling and the provision of services to the national authorities to improve their collaboration with the bodies of the European Union; through training programmes, it ensures an up-to-date look and promotes the different entities of the securities markets to be modernised, thus promoting its growth.

Definition of capital markets

The capital market, also called stock market, is a type of financial market through which are offered and demand funds or means of financing in the medium and long term.
The main purpose of this type of market is to act as an intermediary, channeling new resources and savings of investors, so then, issuers can carry out in their companies for financing and investment operations.
Participate in the capital market different institutions of the financial system, which serve as regulators and also complement the operations that are practiced within the market, the most important being: the stock exchange (provide operability that demand financial operations from the supervision and registration carried out by movements of the offerers and plaintiffs and also provide information qualified with regard to contributions and the financial and economic situation of the) companies), CAs (it is institutions which placed shares with a mission to achieve resources on the part of investors; can be corporations, the Government, lending institutions or subsidiaries of the State but decentralized), intermediaries or bolsas(se ocupan de la compra y venta de acciones y de la administración de la inversión de terceros) houses and investors (may be of natural persons(, foreign investors, institutional investors, among others).
There are various types of capital depending on markets: what is negotiated on them (securities markets: instruments of equities and fixed income instruments and the market of long-term credit: loans and bank credits); structure (organized and unorganized markets markets); and assets (primary market: the asset is issued only once and is interchangeable between issuer and buyer and secondary market: the assets are exchanged between different purchasers, to print them liquidity, and assign them a value).
On the opposite side are the currency markets, which are those that offer and demand for short-term funds.