Stock Market
What is a stock market?
A stock market, also known as a stock exchange, is a formal marketplace for the trading of company securities, principally equities. They come in all shapes and sizes but common features usually include a rule book and criteria for membership.
Where have you heard about stock markets?
Investors will constantly reference the prices quoted on the relevant stock market for the shares that they hold. Financial media will have often have a daily market report, giving share-price movements, market reaction to the day's events and sometimes market gossip.
What you need to know about stock markets...
A stock market exists to allow investors to buy and sell existing shares and for companies to raise money by issuing new shares.
Well-known markets include the New York Stock Exchange (NYSE), on which are traded stocks including Boeing, Ford and banking group Citigroup; the London Stock Exchange (LSE), where you can buy and sell shares in BP, HSBC and Unilever, and Frankfurt, one in which are traded the shares of German industrial giants including Daimler, BMW and Thyssen Krupp.
Along with a rule book and criteria for individual or corporate membership of the exchange, it will have also regulations concerning which shares can be traded on the market - the 'listing criteria'. There may be limits on the extent to which prices can rise or fall in a single trading session, with trading halts to stabilise the market. In many cases, the exchange itself will stand behind the debts of any defaulting member in relation to other members or clients.
Trading sessions have set opening and closing times.