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Securities
Markets
Securities
are bought and sold at two types of securities markets: primary
markets, which issue new securities, and secondary markets, where
previously issued securities are bought and sold. If a company wants
to sell anew issue of stock or bonds it usually negotiates with an
investment bank, or underwriter, who sells the securities for it. The
underwriter buys the securities from the corporation and resells then
to individual investors through the secondary market.
Organized
security exchanges have developed to make the buying and selling of
securities easier. The securities exchanges consist of the individual
investors, brokers, and intermediaries who deal in the purchase and
sale of securities. Security exchanges do not buy or sell securities;
they simply provide the location and services for the brokers who buy
and sell.
Stock
transactions are handled by a stockbroker. A stockbroker buys and
sells securities for clients. Stockbrokers act on the clients orders.
Stockbrokers receive a fee and are associated with a brokerage
house. To trade on the exchange, a "seat" must be
purchased. A seat is a membership. The members represent
stockbrokers.
