The securities trading market is also known as the ” secondary market “, “secondary market” and “securities circulation market. It refers to the place where the issued securities are traded and circulated, and it is the market for the transfer of the ownership of the securities. It provides security holders with liquidity, the ability to sell securities for cash when they need cash, and gives new savers the opportunity to invest. There are two types of stock exchanges : on-the-counter trading and over-the-counter trading. The trading center is the stock exchange. Securities companies are important financial intermediaries through which investors get in touch with stock exchanges, and securities dealers, brokers, etc. are entrusted to handle specific transactions on their behalf.
As the organizer of the securities market, the stock exchange has the following functions:
1) Provide a stock exchange venue. Due to the existence of this market, securities buyers and sellers have centralized trading venues, and they can transfer and realize the securities they hold at any time to ensure the continuous flow of securities.
2) Formation and announcement price. The securities transactions completed in the exchange form the prices of various securities, because the purchase and sale of securities are carried out in a centralized and public manner. The transaction is concluded by means of bilateral bidding, and the price is approximately fair and reasonable at the theoretical level. This price is announced to the society in a timely manner, and is used as an important basis for various related economic activities.
3) Concentrate various social funds to participate in investment. With the increasing number of stocks listed on the exchange and the increasing number of transactions, an extremely wide range of funds can be attracted to stock investment to provide the necessary funds for the development of enterprises.
4) Guide the rational flow of investment. The exchange provides convenience for the free flow of funds, and reflects the profitability and development of securities issuing companies through daily announcements of market prices and listed company information. Make social funds flow in the most needed and beneficial direction.
5) Formulate trading rules. Only when there are rules can a circle be formed, and only fair trading rules can achieve fair trading results. Trading rules mainly include listing and delisting rules, quotation and bidding rules, information disclosure rules, and delivery and settlement rules. The main difference between different exchanges lies in the differences in trading rules. The same exchange may also adopt a variety of trading rules to form market segments. For example, Nasdaq is subdivided into global selected markets and global markets according to different listing conditions. and capital markets.
6) Maintain transaction order. No trading rules can be perfect, and trading rules may not be effectively implemented. Therefore, one of the core functions of the exchange is to supervise various violations of the fairness principle and trading rules, so that transactions can be conducted in a fair and orderly manner. .
7) Provide transaction information. Securities transactions rely on information, including information on listed companies and securities transactions. The exchange has the responsibility of supervising and properly reviewing the information provided by listed companies, and is obliged to announce the trading conditions in real time.
8) Reduce transaction costs and promote stock liquidity. If there is no formal economic organization or an organized centralized securities exchange market, investors must contact each other to determine the transaction price and transaction quantity in order to complete the securities transaction. Such a transaction method will increase the transaction cost and reduce the transaction speed due to the need to find the transaction object, and due to the existence of information asymmetry, transaction default and other factors. Therefore, the existence of a centralized trading market can increase trading opportunities, improve trading speed, reduce information asymmetry, and enhance trading credit, thereby effectively reducing transaction costs.