Monday, January 20, 2020 / 11:34 AM
/ Sponsored Post / Jacob Ethan / Header Image Credit: The Ways To Wealth
A stock exchange doesn't own trading shares. Instead, stock exchange acts as a place where buyers and sellers connect. Although, you're likely to trade stocks via a stockbroker. However, you need to understand the relationship between the companies and exchanges such as the Nigeria Stock Exchange.
According to the Stock Exchange researchers, it is an investment that can deliver excellent results to investors. The market is flexible to incentivize behavior where it compensates market markers benefiting public quotes.
If you are new in stock exchange investment, it has a difference from other forms of investment where you can read more. You have to place your stock trades on a handful of stock exchanges.
What Is an Exchange?
Exchange, in stock trading, is a term meaning a locale where trading takes place. It's the place where buyers and sellers or producers and consumers meet to buy and sell commodities.
When trading financial products, you can choose stocks, currencies, bonds, derivatives, and currencies. Today, modern financial exchanges continue to evolve.
According to The Economist, trading started under the button tree and currently trading at institutions. The institutions are under regulation and have dominated the electronic trading system. According to Consumer Finance, the system came to encourage and not limit honesty in business.
When a stock can't trade on the listed exchange, you can trade it over the counter market or OTC. It's a less formal or regulated market. These over the counter traded stocks usually involves small and riskier companies, such as penny stocks.
Most of the giant blue-chip stocks also started trading with the over the counter market. Today, they are trading at bigger boards such as the NSE.
The Benefits of Stock Exchange
A business will have to raise capital through the selling of shares. When you buy these shares, you are likely to sell their stake at a later date. For example, you need to fund an upcoming project or to cover your bills. It's something that you can also leave for your children.
So, it's your decision that will tie up the funds. Unless you know that in the future, you will sell to a buyer without having trouble with the "secondary market."
The stock exchange is through a process. For example, you might be familiar with world major stock exchanges: the Nasdaq or the New York Stock Exchange. According to NYSE, companies will share their stock through a process known as IPO, or initial public offering that pays investors well.
The Nigerian Stock Exchange
It's a vital sustainable stock exchange that is championing Africans growth. Having been established in 1961, it started operating as Lagos Stock Exchange at Nigerian market. However, it's also a multi-asset exchange having 154 bonds, 166 equities, 53 memorandum listings and 9 Exchange Traded Funds. It's located at 2/4 Custom Street in Lagos at a place called Marina. This NSE services as African leading economy that focuses on the securities exchange.
Nigeria Stock Exchange Regulations
Like many other stock exchanges around the world, NSE is also regulated by the organization responsible - Securities and Exchange Commission - and has the mandate of surveilling the market and forestall market breaches rules and also deter or detect any unfair manipulation or trading practices.
The data about the listed securities concerning the performance are always published every day, week, month, quarterly and annually which can be found at the NSE website.
The Nigerian government is playing a vital role so that it can attract and encourage foreign investment into that country. It has therefore abolished legislation and preventing the flow of the foreign capital in that country. So it has encouraged the foreign brokers in enlisting themselves as Nigerian Stock Exchange dealers giving a chance to all investors worldwide to invest freely. Besides, the Nigeria companies have also been allowed on foreign markets.
To have transparency in the market, NSE bid to promote the trust and transparency by reconstitution of investors protection fund. It's a fund that compensates the investor suffering from the pecuniary loss that comes from cancellation of registration or revocation of dealing member.
The stock exchange is an online trading that can give great profits and also huge losses. So, it has downsides of investments especially after the price will fall to zero. In case the forex broker company can go bankrupt, the stock investors will be paid after bondholders. So due to that and many more reasons, the stock investment can become an emotional rollercoaster. In case you are looking for guaranteed returns, you need to stick to a proper strategy. But for the long term, trading online is a better way to invest.
If the stock market will decline even less than 10 percent, it will be termed as a stock market correction. So, continued falling of prices in a day, it will be termed as a stock crash. In case the price will fall 20 percent or even more, it will be referred to as the bear market that can last even more than a year.
About to Author
Jacob Ethan has been working with writing challenged clients for over 5 years. He provides writing, publishing post services. His articles have appeared in several e-zine sites, including Article Base Hub Pages and TRCB. He can be reached via email@example.com