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A stock trading company is a business that buys and sells shares in a public company. These shares are called stocks and they trade on various world exchanges called stock markets. According to the World Federation of Exchanges, the top stock exchanges in the world are in the United States, Japan, Great Britain and China.
Market Areas
Stock markets are broken down into two market areas. The primary market transacts a company's initial public offering (IPO) of stocks, while the secondary market transacts existing stock shares. Stock trading companies work with both markets.
Regulated
In the United States, the Security Exchange Commission regulates the stock markets. It makes sure that the traders and sellers follow strict and standardized rules of commerce. For example, all publicly traded companies must provide free public access to corporate financial information.
Company Agent
Some public companies sell their stocks directly to investors, but other companies choose a stock trading company to broker these transactions. Investors can arrange to purchase shares of a company's stock on a regular basis.
Online Trading Company
Online stock trading companies allow independent investors to buy and sell shares of stock without the use of a stockbroker. The stock trading company makes the transaction for the client and charges a fee per transaction.
Stock Brokerage Firm
Stock brokerage firms can act as a company agent, traditional stock trader and as an online trading company. The difference is that a brokerage firm offers the use of a financial planner to help investors make financial decisions.
Source:
Securities and Exchange Commission
More Information:
SEC: Trade Execution: What Every Investor Should Know; Security and Exchange Commission
Investing Simulator Center: Investing Online; N.A. Securities Administrators Association
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