Chapter 2 Security Market o Call and continuous market o Call markets In call markets, trading is allowed only at certain specified times o Continuous markets In continuous markets, trades may occur at any time. In a continuous market. financial intermediaries function are so important for investors e Organized exchanges markets o Securities or stock exchange is the most important part of security market
Chapter 2 Security Market Call and continuous market ⚫ Call markets In call markets, trading is allowed only at certain specified times, ⚫ Continuous markets In continuous markets, trades may occur at any time. In a continuous market, financial intermediaries’ function are so important for investors. Organized exchanges markets ⚫ Securities or stock exchange is the most important part of security market
Chapter 2 Security Market o Exchange market has a charter and a set of rules and regulations that govern its operation and the activities of its members In order to become a member, a seat (comparable to a membership card)must be purchased from a current member. o The stock that is available for trading on the exchange is known as a listed security, in other ways, it also can be called public traded security. In order for a company 's stock to be listed, the company must apply to the exchange. The initial application is usually informal and confidential. If approved, the company then makes the formal application that is announced publicly
Chapter 2 Security Market ⚫ Exchange market has a charter and a set of rules and regulations that govern its operation and the activities of its members. ⚫ In order to become a member, a seat (comparable to a membership card) must be purchased from a current member. ⚫ The stock that is available for trading on the exchange is known as a listed security, in other ways, it also can be called public traded security. In order for a company’s stock to be listed, the company must apply to the exchange. The initial application is usually informal and confidential. If approved, the company then makes the formal application that is announced publicly
Chapter 2 Security Market o In U.s.A NYSE. some international securities are traded such as American Depository Receipts (ADRS). ADRs are financial assets that are issued by U.S. banks and represent indirect ownership of a certain number of shares of a specific foreign company that are hold on deposit in a foreign bank e Security exchange members o Commission brokers These brokers take orders that the public has placed with brokerage firms and see to it that they are executed on the exchange The brokerage firms that they work for are paid commissions by the customers for their services
Chapter 2 Security Market ⚫ In U.S.A NYSE, some international securities are traded such as American Depository Receipts (ADRs). ADRs are financial assets that are issued by U.S.banks and represent indirect ownership of a certain number of shares of a specific foreign company that are hold on deposit in a foreign bank. Security exchange members ⚫ Commission brokers These brokers take orders that the public has placed with brokerage firms and see to it that they are executed on the exchange. The brokerage firms that they work for are paid commissions by the customers for their services
Chapter 2 Security Market o Floor broker. Also known as tow dollar brokers They assist commission brokers when there are too many orders flowing into the market for the commission brokers to handle alone. For their assistance, they receive part of the commissions paid by the investor. o Floor trader. These brokers trade solely for themselves and prohibited by exchange rule from handling public orders o Specialists. These brokers perform tow roles. First any limit order that the commission broker cannot execute immediately because the current market price is not at or better than the specified price will be left with the specialist for possible execution in the future
Chapter 2 Security Market ⚫ Floor broker. Also known as tow– dollar brokers. They assist commission brokers when there are too many orders flowing into the market for the commission brokers to handle alone. For their assistance, they receive part of the commissions paid by the investor. ⚫ Floor trader. These brokers trade solely for themselves and prohibited by exchange rule from handling public orders. ⚫ Specialists. These brokers perform tow roles. First, any limit order that the commission broker cannot execute immediately because the current market price is not at or better than the specified price will be left with the specialist for possible execution in the future
Chapter 2 Security Market In this capacity the specialist can be called"broker's broker” Second, the specialist acts as a dealer in certain stocks (in particular, for the same stocks in which he or she acts as a broker). This means that the specialist buys and sells certain stocks for he or she own account and its allowed to seek a profit in doing so. In this capacity the specialist is required by the exchange to maintain a"fair and orderly market e How to trade security
Chapter 2 Security Market In this capacity the specialist can be called “broker’s broker”. Second, the specialist acts as a dealer in certain stocks (in particular, for the same stocks in which he or she acts as a broker). This means that the specialist buys and sells certain stocks for he or she own account and its allowed to seek a profit in doing so. In this capacity the specialist is required by the exchange to maintain a “fair and orderly market”. How to trade security