Stock Market as a type of market

Stock market: A stock market is a physical place, sometimes known as a stock exchange, where brokers gather to buy and sell stocks and other securities.

The term is also used more broadly to include electronic trading that takes place over computer and telephone lines

Constituents of Stock Market

Types of Securities

Screen-based trading and Dematerialization

NSE arrived with a fully computerized order book in 1994 called NEAT (National Exchange for Automated Trading).

Stock Market

ParticipantsFor e.g.: BHEL

Investors For e.g.: FII

Intermediaries For e.g.: ICICI

direct

Security Market

Primary Market Secondary Market

This enabled it to spread across to various towns and cities in India by setting up terminals connected to the central system through VSAT.

Trading in 1363 securities through 2856 VSAT terminals (servicing 9000 users) spread across 354 cities

Bid & Ask Price

The difference in the price of the best bid and ask is called as the Bid-Ask spread and often is an indicator of liquidity in a stock. The narrower the difference the more liquid or highly traded is the stock.

Regulatory Framework

SEBI Act (1992): SEBI has been obligated to protect the interests of the investors in securities and to promote and development of, and to regulate the securities market.

Following are the functions :

Regulating the business in stock exchanges.

Registering and regulating the working of stock brokers.

Promoting and regulating self-regulatory organizations.

Prohibiting insider trading in securities.

Regulating substantial acquisition of shares.

Leving fees or other charges for carrying out various activities.

Conducting research for various activities.

Conclusion

• Both buyers and sellers are price takers. ×

• The number of firms/individuals is large. a

• There are no barriers to entry. ×

• The firms' products are identical. a

• There is complete information. ×

• There are no regulations. ×