Definition of stock market

Definition of stock market

The stock market, known as the Stock Market, is the market that regulates the buying and selling of securities, such as stocks and bonds, by following up on the controlling factors related to the nature of supply and demand within the financial market. The stock market is also known as the market that relies on the application of investing in securities, such as buying and selling shares issued by private companies.

Another definition of the stock market is the physical or virtual electronic place in which there is a group of sellers and buyers with the aim of achieving trading of securities between them, and this market is divided into two markets; They are the primary market through which securities are issued for the first time, and the secondary market that is used to trade previously issued securities.

The emergence of the stock market

The city of Venice is considered the first place that witnessed trading of securities in the year 1300 AD, and it used boards containing information on the various securities offered for trading, and in the year 1531 AD the stock exchange appeared with a clearer concept in the city of Antwerp in Belgium, and brokers met in it in order to carry out commercial transactions and follow up on debts imposed on individuals. In the year 1600 AD with the emergence of the East India Company, this contributed to strengthening the idea of ​​the financial market by granting the French, British and Dutch governments documents that help the company to collect their profits shares, and with the passage of time the first stock exchange appeared in London in 1773 AD, but it was restricted in terms of Dealing with stocks, unlike the New York Stock Exchange, which applied stock trading in its financial market.

Developments in communication technology and the Internet in the twenty-first century contributed to a direct impact on the nature of trading in the financial markets, which led to the conversion of financial transactions into electronic trading, and this resulted in a change in the world of investments, and customers began to use computer systems in the implementation of special buying and selling operations. in stock; In order to reach the implementation of deals between the parties in easy ways.

Characteristics of the stock market

The stock market is characterized by a set of characteristics; Which:

• Returns and risks: One of the basic characteristics of the stock market; Assets, such as stocks, are characterized by a high degree of risk, and are affected by special changes in the economic environment and the nature of competition between companies over sales and profits, which contribute to determining the prices of these shares.
• the changes: They are the fluctuations that occur in the financial markets, and appear as a result of changes in prices associated with a group of events, such as: government economic reports and enterprise profits, so successful investors in financial markets are keen to hedge against changes and fluctuations; This is done by diversifying the investments within their investment portfolios.
• Liquidity: It is the provision of a stock market for margins that clarify the differences between buyers and sellers of securities by encouraging these markets to bring together establishments and companies from all over the world. Information technology has also contributed to the promotion and support of private trading in financial markets. By publishing financial information for investors and participants in these markets.
• Globalism: Among the characteristics and advantages of stock markets; As it brings together all European, American and Asian companies, which contributes to encouraging individual and institutional investors to use electronic networks available around the clock in applying trading operations.
• Organization: One of the most important basic characteristics of financial markets; It relies on the existence of laws that regulate it, and ensures that all investors have access to private information in investment operations at the appropriate times for them.

The importance of the stock market

The stock market is one of the important markets in the economic sector, and its importance is summarized according to the following points:

• Economic indicatorThat is, the stock market is used as an indicator to measure the economic situation of countries, and it also helps to reflect all changes, and to clarify stock prices in terms of rise or fall, which indicate prosperity or recession in the economic situation.
• Setting prices for securitiesHelping to provide values ​​for securities that depend on the effect of supply and demand, and this contributes to assessing the nature of demand for these securities, which is considered one of the important benefits for investors; It helps to know the value of investments.
• Ensure the safety of financial operationsIt is one of the important things that these markets apply, as it depends on observing the safety of companies and their ability to apply regulations and rules while dealing with the stock exchange.
• Participation in economic growth: The stock markets support the ability to invest, through the exchange of securities between different companies, which leads to building capital and contributing to economic development.
• Encouraging savings and investmentBy providing investment offers for most securities, which contributes to attracting many individuals towards saving in order to invest in securities offered through companies, instead of applying investments in assets that do not achieve any financial returns, such as gold.

stock market objectives

The stock market seeks to achieve a set of goals, the most important of which are:

• Building a safe investment environment capable of achieving credible competition.
• Developing all methods and means used in trading; By applying the best and latest methods.
• Developing work in the stock market; Through excellence in the services provided to individuals and establishments.
• Providing information about trading to investors and dealers in the stock market.
• Supporting private awareness in investment, which includes all individuals in society; Especially those dealing with the stock market.
• Diversity in financial instruments used by investors in the stock market.