A Stock Exchange Market trades shares and securities of companies and corporations. It is one of the categories of the capital market that plays a prominent role in determining how healthy an economy is for investors.
This highlights the importance of the stock exchange, its functions, and a few examples of stock exchanges around the world.
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What is Stock Exchange Market?
The Stock Exchange Market is a secondary market where investors can purchase or sell existing shares, stocks and debentures to other investors.
It is so organised that there are rules and guidelines for companies to be quoted on the market. The activities of the Stock Exchange Market is also regulated.
For instance in Nigeria, the Securities and Exchange Commission (SEC), an agency under the Federal Ministry of Finance, controls the activities of the Nigerian Stock Exchange which is now known as Nigerian Exchange (NGX).
Understanding the Working of the Stock Market
If you missed the opportunity to buy stocks of a company during its Public Offer, which is under the Primary Market category, the Stock Exchange Market is a place where you can find sellers of the stocks you missed who want to trade their shares.
It is a place where interested securities investors are brought into contact with the sellers. It is an essential part of the capital market.
The Stock Exchange Market is the hub for companies to raise capital. It is important to note that the Stock Exchange Market deals in old and existing shares only.
You can only purchase new stocks at the primary market. And every transaction must follow a prescribed set of rules and regulations. Certified stockbrokers play major roles in the smooth purchase and sale of stocks in the Stock Exchange Market.
Examples of Stock Exchange Market
On the global front, there is the New York Stock Exchange in the United State
In Africa, the Johannesburg Stock Exchange (JSE) is the largest stock exchange on the continent. Others on the continent include the Nigerian Exchange (formerly Nigerian Stock Exchange), and Angola Debt and Stock Exchange are among the over 30 Stock Exchange Markets on the continent.
In Nigeria, for instance, Nigerian Stock Exchange is headquartered in Lagos, with 13 branches in Abuja, Owerri, Kaduna, Kano, Onitsha, Ibadan, Yola, Benin, Uyo, Port Harcourt, Ilorin, Abeokuta, and Bauchi.
Some of the quoted firms in the Nigerian Exchange are Bua Foods, Dangote Cement, MTN Nigeria Plc, Dangote Sugar, Bua Cement, Nestle Food Nigeria Plc, and Guinness Plc. Among others.
Functions of Stock Exchange Market
The Stock Exchange Market of a country plays lots of important roles, some of them are:
1) The Stock Exchange Market is a platform through which investors can get professional advice through reputable stock brokers on the sales and management of securities.
2) It facilitates the smooth transfer of ownership of shares between investors. The market makes it possible for investors to either expand their portfolio or withdraw totally from the capital market by selling off their shares.
3) It is a safe “haven” for investors to make their money work for them while they get their share dividend every year, depending on the agreement of stakeholders.
4) As part of the capital market, the stock exchange market, it creates a platform for raising capital thereby enabling companies to expand.
5) Sanctioning issuers of listed companies if they run foul of any of the rules guiding stock trading on the floor of the house.
6) The Stock Exchange Market isn’t exclusively designed for private firms, it is also an avenue for the government to raise funds by selling bonds.
What’s the largest stock market in Africa?
The Johannesburg Stock Exchange is the largest stock market on the continent with a market capitalization of US$1,282 billion as of October 2021.
Who controls the stock market?
In most countries around the world the Securities and Exchange Commission e.g the United States and Nigeria.
In South Africa, while the Financial Sector Conduct Authority (FSCA), supervises the activities and duties of the Johannesburg Stock Exchange (JSE)
How does the stock exchange market make money?
Stock markets make money from listing fees and this depends from country to country and it depends on the market classification.
For instance, in South Africa, a new listing documentation fee of R72 526.32 is required, according to the client portal.jse.co.za with additional documentation fees.
For a growth board, the listing fee is NGN450,000; and it’s NGN4.2 million for the main board and premium board
What’s the largest stock exchange market in the world?
The New York Stock Exchange in the United States is the largest stock exchange in the World, with a market capitalization of US$27.7 trillion in 2021, according to statista.com
How can I get information about a quoted firm in a country?
The best place to get enough information about a listed company is the country’s stock market.