From SharePrice, the free financial encyclopedia
Market Overview
A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks(also called shares), which represent ownershipclaims on businesses.
These may include securities listed on a public stock exchange as well as stock that is only traded privately, such as shares of private companies that are sold to investors through equity crowdfunding platforms.
Stock Exchange
A stock exchange is a centralized location where stock brokers and traders can buy and sell securities, such as shares of stock and bonds. The primary purpose of a stock exchange is to ensure fair and orderly trading and efficient dissemination of price information for any securities trading on that exchange.
Market Participants
Stock markets bring together various market participants, including:
- Individual retail investors
- Institutional investors (pension funds, mutual funds, etc.)
- Market makers and specialists
- Brokers and dealers
- Regulators
Market Trends
The total market capitalization of all publicly traded stocks worldwide rose from US$2.5 trillion in 1980 to US$111 trillion by the end of 2023.
Market trends can be classified into primary, secondary, and secular trends. Primary trends last from one to three years, secondary trends last from three weeks to three months, and secular trends can last for several decades.
Trading Mechanisms
Modern stock markets use electronic trading systems. These systems can match buyers and sellers automatically, providing better efficiency and reduced trading costs. High-frequency trading has become increasingly important in market operations.
Regulation
Stock markets are regulated by government agencies to protect investors and maintain market integrity. Common regulations include registration requirements, disclosure rules, and prohibitions against fraudulent activities.
In the United States, the Securities and Exchange Commission (SEC) is the primary regulatory body. Other countries have similar regulatory bodies, such as the Financial Conduct Authority (FCA) in the United Kingdom.