What is the place where big money is made, shares in companies are bought and sold, and loans are given?
The securities market — is where stocks, bonds, and other assets are traded. It allows for fair pricing. A securities market has a number of characteristics, such as:
- it has a fixed trading platform, such as the Ashgabat Stock Exchange;
- trading procedures are established according to time and standards;
- all transaction processing is centralized;
- the activities of all market participants are monitored by authorized bodies;
- official securities quotations exist.
The exchange is operated by professional participants—its investment arm. These include banks, brokers, dealers, and other organizations directly involved in securities trading.
Technical participants - clearing centers, depositories, and registrars—support the trading process. Information support is an important part of the exchange's operations; it interacts with news agencies and the business press.
There are three types of participants involved in securities trading:
Issuers - are companies that issue and sell their securities;
Investors - are individuals or companies that purchase securities;
Professional participants - are individuals or companies whose activities are officially associated with the exchange (brokers who conduct transactions on behalf of investors, banks, dealers, and management companies).
A private investor cannot independently trade on the stock exchange, including the securities market. To access the trading platform, they need a broker - a professional with a special license that allows them to conduct asset transactions. This intermediary is not an individual, but a brokerage firm.
In addition to choosing a broker, you need to open a brokerage account. The investor will transfer funds into it, and the broker will withdraw them to buy securities. And vice versa, to sell them.
A broker can also act as a tax agent. When an investor receives income from transactions, they are required to pay income tax on the profit. The broker handles all settlements, and the net amount is deposited into the investor's brokerage account.
Once a transaction is completed and the securities are acquired, a record of this and the securities themselves are stored in a depository. This is a financial market participant that records and stores assets.
Brokerage and depository services are always paid; they can be included in the transaction as a percentage or paid separately according to the established tariff.