MAJOR STOCK EXCHANGE

What is Stock Exchanges?

 Stock exchanges are secondary markets, where existing owners of shares can transact
with potential buyers.
 A stock exchange is a centralized location that brings corporations and governments
together with investors so trading activity can take place.
 A stock exchange facilitates stock brokers to trade company stocks and other securities.
A stock may be bought or sold only if it is listed on an exchange. A stock may be bought
or sold only if it is listed on an exchange. Thus, it is the meeting place of the stock buyers
and sellers
 The major difference of stock exchanges among all other types of exchanges is that its tradable
assets are only exclusive or limited to stocks, bonds and ETP or known as exchange traded
products.

Three main types of ETP:

1. ETFs, or exchange traded funds.

2. ETNs, or exchange traded notes.

3. ETCs, or exchange traded commodities.

Companies are required to meet specific standards and condition in order for companies to be part as
well as be listed on a major stock exchange – these standards depends on the stock exchange posted.

THE PRIMARY AND SECONDARY MARKET

The Difference of Primary and Secondary Market:

 First, they differ in their key players; in the primary market commonly only institutional
investors can bought securities, while in the secondary market, any individual investors can
bought or sold securities. 
 Second, new stocks were issued in the primary market, while in the secondary market is where
those securities are traded by investors. Moreover, prices are fixed in the primary market, while
in the secondary market depends on the supply and demand of the investors.
 Lastly,  Investors can directly buy securities from the issuer/ company in the primary market,
while in the secondary market, they buy and sell securities among themselves. 

WHAT ARE THOSE BOUGHT AND SOLD IN THE MARKET

Securities such as stocks, bonds, funds, derivatives, and currencies are can be bought in the market. In
the primary market, the investors could buy securities directly through the issuer, and there are lots of
opportunities in this market because investors will be able to choose from new issued securities. While
on the other hand, secondary market basically serves as the stock market (Stock Exchanges locally or
global). 

THE KEY PLAYERS:

 The players of the primary markets are those investors in the field such as investment banks,
government, endowments, mutual funds, hedge funds, pension funds, insurance funds
companies and alike institutional investors. Individual investor doesn’t commonly participate in
the primary market.
 In the secondary market, there are many individual investors that are commonly invests, which
is mediated by a stock exchange market (e.g., PSE, NYSE)

Stock Exchanges Platform

AUCTION EXCHANGES
 Auction exchanges or the auction market is a place where buyers and sellers put in competitive
bids and offers at the same time. In an auction exchange, the current stock price is the highest
price a buyer is willing to spend on a security, while the lowest price is what the seller will
accept. Trades are then matched and when paired together, the order is executed.

 The New York Stock Exchange (NYSE) is the world's largest equities exchange. Although some of
its functions have been transferred to electronic trading platforms, it remains one of the world's
leading auction markets, meaning specialists (called "Designated Market Makers") are physically
present on its trading floors. ach specialist specializes in a particular stock, buying and selling the
stock in the auction.

ELECTRONIC EXCHANGES
 These exchanges are considered more efficient and much faster than traditional exchanges and
carry out billions of dollars' worth of trades each day. The Nasdaq is one of the world's leading
electronic exchange. The Nasdaq is sometimes called screen-based because buyers and sellers
are only connected by computers over a telecommunications network.
 Market makers, also known as dealers, carry their own inventory of stock. They stand ready to
buy and sell stocks on the Nasdaq and are required to post their bid and ask prices. electronic
exchange. The Nasdaq is sometimes called screen-based because buyers and sellers are only
connected by computers over a telecommunications network.

ELECTRONIC COMMUNICATION NETWORK

 Electronic communication networks (ECNs) are part of an exchange class called alternative
trading systems (ATSs). ECNs connect buyers and sellers directly. Because they allow a direct
connection between the two, ECNs bypass market makers.

OVER THE COUNTER

 The term over-the-counter (OTC) refers to markets other than the organized exchanges
described above. There are two OTC markets.
 o The first is the Over-the-Counter Bulletin Board (OTCBB)—an electronic community of
market makers. Companies that fall off the Nasdaq often end up here. On the OTCBB,
there are no quantitative minimums or no minimum annual sales or assets required to
list.
o The second OTC market is referred to as the Pink Sheets, a listing service that doesn't
require companies to register with the Securities and Exchange Commission (SEC).
Liquidity is often minimal, and these companies are not required to submit quarterly.

FUNCTIONS OF STOCK MARKET

 Ensure liquidity of Capital

 Providing liquidity and Marketability to Existing Securities
 Economic Barometer
 Promote the habit of saving and investment
 Help capital formation
 Investors Education
 Protection of Investors
 Motivates better performance
 Evaluation of securities

10 LARGEST STOCK EXCHANGES IN THE WORLD BY MARKET

1. New York Stock Exchange

 Stock exchange located in New York City that is the largest equities-based exchange in the
world, based on the total market capitalization of its listed securities
 Established on May 17, 1792
 Capital market:$19.3 trillion US.
 The New York Stock Exchange passed the milestone of one million shares traded in a single day
in 1886. In 1987, 500 million shares were changing hands on the NYSE during a normal business
day; by 1997, one billion shares were traded daily on the NYSE.

2. NASDAQ- National Association of Securities Dealer Automated Quotations.

 It is a global electronic marketplace for buying and selling securities. Nasdaq was created by
the National Association of Securities Dealers (NASD) to enable investors to trade securities on a
computerized, speedy and transparent system, and commenced operations. 
 Established February 4, 1971
 Capital market: $13.8 trillion US

3. Tokyo stock Exchange

 The largest stock exchange in Japan, headquartered in its capital city of Tokyo. The Tokyo Stock
Exchange was established on May 15, 1878
 It has capital market of $5.7 Trillion US
 When the Tokyo Stock Exchange (TSE) first opened in 1878, some of its first customers were
former samurai, who needed a market to trade bonds that had been issued to them by the
government.
4. Shanghai stock Exchange

 It is the largest exchange in mainland China.

 It is a nonprofit organization run by the China Securities Regulatory Commission (CSRC). Stocks,

funds, bonds, and derivatives are all traded on the exchange.
 It was established on November 26,1990
 Capital market: $4.9 trillion US

5. Hong Kong Stock Exchange

 One of the world’s largest securities markets by market capitalization, the Hong Kong Stock
Exchange traces its origins to the founding of China's first formal securities market, the
Association of Stockbrokers in Hong Kong.
 Establish on February 3, 1891
 Capital market: $4.4 trillion US

6. Euro next

 It operates the largest stock exchange in Europe, a combination of three former exchanges from
France, Belgium and the Netherlands.
 Established on September 2000
 Capital market: $3.9 trillion US

7. Shenzhen Stock Exchange

 Is one of two main stock exchanges operating independently in mainland China. The other
exchange is the Shanghai Stock Exchange (SSE). The Shenzhen Stock Exchange (SZSE) is a self-
regulated legal entity under the supervision of the China Securities Regulatory Commission
(CSRC). The main functions of the Shenzhen Stock Exchange (SZSE) are to oversee securities
trading, provide the facilities for securities trading, and devise operational rules.
 Establish on December 1, 1990
 Capital market: $3.5 Trillion US

8. London Stock Exchange

 The London Stock Exchange (LSE) is one of the oldest stock exchanges in the world, the largest in
Europe, and the primary stock exchange of the United Kingdom.
 Established on January 23, 1571
 Capital market: $3.2 trillion US

9. Toronto Stock Exchange

 Owned and operated as a subsidiary of the TMX Group, the Toronto Stock Exchange (TSX) is the
most significant stock exchange in Canada. Until 2001, the Toronto Stock Exchange was known
as the TSE.
 Established on October 25, 1861
 Capital Market: $2.1 Trillion US
10. Bombay Stock Exchange

 Is the first and largest securities market in India The BSE is known for its electronic trading
system that provides fast and efficient trade execution.
 Established on July 9, 1875
 Capital market: $1.7 trillion US