Stock exchange market is a specialized market that deals with the buying and selling of shares, stocks and other securities.
FUNCTIONS/IMPORTANCE OF STOCK EXCHANGE MARKET (SEM)
- To establish modalities for raising long – term capital.
- To establish a market where second-hand securities could be bought and sold.
- To assist government in implementing its monetary policies.
- It serves as a medium of disseminating information to industrialists and investors.
- To enable companies raise capital for the smooth operation of their business.
MEMBERSHIP OF THE SEM
Participants in this market are companies that are quoted. A quoted company is a company that is registered with the stock exchange market in order to raise long-term investible capital. Other participants are affiliates of quoted company such as:
Is an intermediary between quoted company and the SEM. Its deal and activities centre n stock. The stockbroker sees to the following:
- Arrangement of stock or shares.
- Share allotment and explanation to the public.
- Procedures and modalities for buying shares in a quoted company’s. The stockbroker is paid a commission called brokage.
do not deal directly with the public but with the brokers, and they do not have possession of the securities they trade on.
Are salaried assistants employed by the brokers
Are employees of one of the principal members of the SEM.
TYPES OF SECURITIES DEALT WITH IN STOCK EXCHANGE MARKET.
(1) Stock (2) Shares (3) Debentures
(4) Bonds (5) Gift-Edged Securities.
TYPES OF MARKET IN THE STOCK EXCHANGE MARKET
First -Tier Securities Market (FSM)
This is also known as primary market. It is a market where securities are traded at the first hand.
Requirement: For a company to be quoted in FSM. It must have the license stock broker and broad-base Board of Directors.
Second-Tier Securities Market (SSM)
This is a market where stock or shares are traded at second hand.
IMPORTANCE OF STOCK EXCHANGE MARKET
- Raising long-term investible capital.
- Less interest rate is always obtained in raising money from the public.
- It encourages the availability of fund for investment.
Means the number of shares that can be sold to any share buyer at a particular time giving the selected amount in which the company cannot sell less than
METHOD OF ISSUING NEW SECURITIES
- By prospectus. 2. By offer for sale.
- By tender. 4. By placing.
- By issue to existing shareholders.