Question & Answer About Stock Market

Hi! I know you have some question in your mind about the Stock Market and maybe some of that question is like; what is stock market?, who are the participants of the stock market? and how it works?. 

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What is Stock? A simple definition; Stock is a share of ownerships in a Corporation. When you buy stocks you become a part owner of that company and also you participate in the company's growths or loss.

What is Stock Market? Stock Market is simply a place where you can buy & sell a share of stock.

What is Stock Broker or Trading Participant? Stock Broker or Trading Participant is licensed by the Securities and Exchange Commission (SEC) and a member of the Philippine Stock Exchange (PSE). They are authorized to execute orders for purchases or sales of stocks.

What is a Publicly Listed Company? They are the company's listed in the Philippine Stock Exchange (PSE) that offers shares of stocks to the public or investor like us, who passed the strick standards set by the PSE. 

Who are the Stock Market Participants? Stock Market participants are composed of the following; Philippine Stock Exchange (PSE), a Publicly Listed Company, the Trading Participants or Stockbroker and the Investor. For further explanation see below (excerpt from Building Wealth with the Stocks e-book):

•  Philippine Stock Exchange (PSE) - The role of the PSE goes beyond bringing buyers and sellers together and facilitating sale and purchase of stocks. It makes sure that these transactions are done in an efficient, orderly, fair, and transparent manner. It enforces rules and regulations that it’s members (publicly listed companies and trading participants) must strictly abide by. In this way, the PSE fulfills its function as the guardian of the stock market.

Photo credit: business.inquirer.net

• Publicly Listed Companies - A company becomes publicly listed when its shares are traded in the PSE.  To become a publicly listed company, a company must meet the stringent listing and reportorial  requirements of the PSE to safeguard the investors’ interests and ensure transparency.

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• Trading Participants or Stockbrokers - A Stockbroker or Trading Participant acts as an agent/broker between buyer and seller of stocks in the stock market.  A TradingParticipant is licensed by the Securities and Exchange Commission and is a member of the PSE, authorized to execute orders for purchases or sales of stocks.

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• Stockholders or Investors (you) - Investors in stocks or stockholders are those who own shares of stock of a publicly listed company, at least until the time that they decide to sell  them. 

How Stock Market Works? (See illustration)

Source of images: Building Wealth with the Stocks e-book

To  further elaborate the illustration;

• PSE - The PSE protects the investor like us and safeguards our interests, they carefully monitor & screens the companies who want to be a Publicly Listed before they can offer stocks to the public. PSE only transact business with a licensed Stock Broker. They do this in order to have a control in the system and to make it simple.
• Stock Broker or Trading Participant - Act as a middle man between the investor & the PSE. In order for the investor to buy or sell stocks they must deal with the  licensed Stock Broker, because the PSE does not transact directly to the investor only to the authorized Stock Broker or Trading Participant. Stock Broker also provides you information about the Publicly Listed Company which give you idea to choose which shares of stock to buy.
• Investor - A person who wants to own a share of stocks of a Publicly Listed Company in the PSE like us. In order to do that we must contact and deal with the Licensed Stock Broker to place an order or buy of stocks. We will pay them a small amount of charge for every transaction services we execute. 

To summarize, PSE take care of the Publicly Listed Company, protects our investment & deal only to a licensed Stock Broker and Stock Broker as our middle man serves us and guide us to place a buy or sell on our stock order.

Hope you find the answer to your question here and see you in my next post. Thanks for reading & God Bless to you....

By the way, I join Truly Rich Club and I learned a lot at the club about how to gain Financial Wealth & Spiritual Abundance at the same time. Because of the guidance from club through the Stocks Update I'm now investing in the Stock Market, I'd like you to experience it too. To be a member click sign up.


Read Also:
Investing in the Philippine Stock Market?
Truly Rich Club & the Stock Market
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Join us at the Truly Rich Club now! founded by Bo. Sanchez, its purpose is to "help good people become rich". Because of the guidance I get from the Club, I’m now investing in the Stock Market! I’m inviting you to join the Club too. If you’re interested, click the link here and registered Truly Rich Club.