STOCK MARKET

Stock Market

Role Played By the Stock Market

Introduction

Financial markets have experienced massive ups and downs in the past decade. These events have affected their value and future estimates. This paper examines the role played by the stock market in financial system with an overview and classification of financial institutions in the UK and lastly examines the structure and role of the Loyd's of London insurance market.

Discussion

Examine the role played by the stock market in financial system

Stock exchanges and financial markets are places where different financial products are traded, among these the best known are the stocks and bonds. There are many other products (options, warrants, warrants) whose number is limited to the imagination of the financiers. The stock market plays a dual role of being both a place of finance for companies, governments or communities (issuing shares or bonds) but also a place of investment (investors).

This is the reason why stock market is split into two sub markets which are respectively the primary and the secondary market.

The role of the primary market is to organize the meeting of companies seeking to finance their development and capital holders (you can draw a parallel between the primary and the new home market).

The secondary market is rather the role of second-hand market where different stakeholders can trade securities, it is this market which is much more active on the exchange since it billions of pounds per day the London stock exchange.

The stock market plays a vital role in today's economy; companies will find some of the capital necessary for their expansion while the state will finance the deficit in its accounts. Originally, the stock market was an assumed market open to anyone who wanted to sell or buy; the Paris Bourse was certainly built with this in mind, and sat in a building built at public expense. They quickly realized that to approve these contracts, it was an official body. Thus the persons authorized to exercise the stock market were limited to certain classes of operators, it is the broker who today are the gatekeepers to operate the stock exchange. Indeed, an individual can not directly intervene in the market; he must transmit his orders to a financial intermediary (brokerage firm, financial institution)( www.treasury.govt.nz).

Unlike the OTC markets in which trade is conducted by bilateral agreement between a buyer and a seller, the stock market is a regulated market that organizes:

Liquidity, i.e. the ease of trade by the concentration of the largest possible number of orders and sales.

Equality between all stakeholders through transparency and instant access to the market.

The safety, by ensuring that buyers and sellers will be delivered paid to date.

Finally, the stock market as an instrument of investment, allows individuals to become partners of the largest private industrial and commercial through actions. They also become creditors for these companies and public bodies as state and large national companies by buying bonds. In many countries, stock markets are an important element of the existing financial systems. Financial systems without liquid and efficient stock markets could not function efficiently ...