Securities Market - an exchange where security trading is conducted by professional stockbrokers ecurities market is an economic institute,which, within takes

place the sale and purchase transactions of securities between subjects of the economy, on the base of demand and supply. Also we can say that securities market is a system of interconnection between all participants (professional and nonprofessional) that provides effective conditions: to buy and sell securities, and also to attract new capital by means of issuance new security (securitization of debt), to transfer real asset into financial asset, to invest money for short or long term periods with the aim of deriving profit. commercial function (to derive profit from operation on this market) price determination (demand and supply balancing, the continuous process of prices movements guarantees to state correct price for each security so the market corrects mispriced securities) informative function (market provides all participants with market information about participants and traded instruments) regulation function (securities market creates the rules of trade, contention () regulation, priorities determination)

Specific functions of the securities market Transfer of ownership (securities markets transfer existing stocks and bonds from owners who no longer desire to maintain their investments to buyers who wish to increase those specific investments. There is no net change in the number of securities in existence, for there is only a transfer of ownership. The role of securities market is to facilitate () this transfer of ownership. This transfer of securities is extremely important, for securities holders know that a secondary market exists in which they may sell their securities holdings. The ease with which securities may be sold and converted into cash increases the willingness of people to hold stocks and bonds and thus increases the ability of firms to issue securities) Insurance (hedging) of operations though securities market (options, futures, etc.)

evels of securities market

[edit]Primary

market

The primary market s that part of the capital markets that deals with the issue of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is a public offering. Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus. Primary markets creates long term instruments through which corporate entities borrow from capital market. Features of primary markets are:

This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM). In a primary issue, the securities are issued by the company directly to investors. The company receives the money and issues new security certificates to the investors. Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business. The primary market performs the crucial function of facilitating capital formation in the economy. The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as "going public."

[edit]Secondary

market

The secondary market, also known as the aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold. The term "secondary market" is also used to refer to the market for any used goods or assets, or an alternative use for an existing product or asset where the customer base is the second market (for example, corn has been traditionally used primarily for food production and feedstock, but a "second" or "third" market has developed for use in ethanol production). Stock exchange and over the counter markets. With primary issuances of securities or financial instruments, or the primary market, investors purchase these securities directly from issuers such as corporations issuing shares in an IPO or private placement, or directly from the federal government in the case of treasuries. After the initial issuance, investors can purchase from other investors in the secondary market. The secondary market for a variety of assets can vary from loans to stocks, from fragmented to centralized, and from illiquid to very liquid. The major stock exchanges are the most visible example of liquid secondary markets - in this case, for stocks of publicly traded companies. Exchanges such as the New York Stock Exchange, Nasdaq and the American Stock Exchange provide a centralized, liquid secondary market for the investors who own stocks that trade on those exchanges. Most bonds and structured products trade over the counter, or by phoning the bond desk of ones broker-dealer. Loans sometimes trade online using a Loan Exchange. [edit]Over-the-counter

market

Over-the-counter (OTC) or off-exchange trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. It is contrasted with exchange trading, which occurs via facilities constructed for the purpose of trading (i.e., exchanges), such as futures exchanges or stock exchanges. In the U.S., over-the-counter trading in stock is carried out by market makers that make markets in OTCBB and Pink Sheets securities using inter-dealer quotation services such as Pink Quote(operated by Pink OTC Markets) and the OTC Bulletin Board (OTCBB). OTC stocks are not usually listed nor traded on any stock exchanges, though exchange listed stocks can be traded OTC on the third market. Although stocks quoted on the OTCBB must comply with United States Securities and Exchange Commission (SEC) reporting requirements, other OTC stocks, such as those stocks categorized as Pink Sheets securities, have no reporting requirements, while those stocks categorized as OTCQX have met alternative disclosure guidelines through Pink OTC Markets. An over-

the-counter contract is a bilateral contract in which two parties agree on how a particular trade or agreement is to be settled in the future. It is usually from an investment bank to its clients directly. Forwards and swaps are prime examples of such contracts. It is mostly done via the computer or the telephone. For derivatives, these agreements are usually governed by an International Swaps and Derivatives Association agreement. This segment of the OTC market is occasionally referred to as the "Fourth Market." The NYMEX has created a clearing mechanism for a slate of commonly traded OTC energy derivatives which allows counterparties of many bilateral OTC transactions to mutually agree to transfer the trade to ClearPort, the exchange's clearing house, thus eliminating credit and performance risk of the initial OTC transaction counterparts.. [edit]Main

financial instruments

Bond, Promissory note, Cheque a security contains requirement to make full payment to the bearer of cheque, Certificate of deposit, Bill of Lading (a Bill of Lading is a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods." ), Stock. [edit]Promissory

note

[[Promissory Note |A promissory note]], referred to as a note payable in accounting, or commonly as just a "note", is a contract where one party (the maker or issuer) makes an unconditional promise in writing to pay a sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms. They differ from IOUs in that they contain a specific promise to pay, rather than simply acknowledging that a debt exists. [edit]Certificate

of deposit

A certificate of deposit or CD is a time deposit, a financial product commonly offered to consumers by banks, thrift institutions, and credit unions. CDs are similar to savings accounts in that they are insured and thus virtually risk-free; they are "money in the bank" (CDs are insured by the FDIC for banks or by the NCUA for credit unions). They are different from savings accounts in that the CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest. [edit]Bond Bond - an issued security establishing its holder's right to receive from the issuer of the bond, within the time period specified therein, its nominal value and the interest fixed therein on this value or other property equivalent.

The bond may provide for other property rights of its holder, where this is not contrary to legislation. [edit]Stocks

(shares)

[edit]Common shares

Common shares represent ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the major decisions made by management.Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, and preferred shareholders are paid. [edit]Preferred stock Preferred stock represents some degree of ownership in a company but usually doesn't come with the same voting rights. (This may vary depending on the company.) With preferred shares investors are usually guaranteed a fixed dividend forever. This is different than common stock, which has variable dividends that are never guaranteed. Another advantage is that in the event of liquidation preferred shareholders are paid off before the common shareholder (but still after debt holders). Preferred stock may also be callable, meaning that the company has the option to purchase the shares from shareholders at anytime for any reason (usually for a premium). Some people consider preferred stock to be more like debt than equity. [edit]Professional

participants

Professional participants in the securities market - legal persons, including credit organizations, and also citizens registered as business persons who conduct the following types of activity: Brokerage shall be deemed performance of civil-law transactions with securities as agent or commission agent acting under a contract of agency or commission, and also under a power (letter) of attorney for the performance of such transactions in the absence of indication of the powers of agent or commission agent in the contract. Dealer activity shall be deemed performance of transactions in the purchase and sale of securities in one's own name and for one's own account through the public announcement of the prices of purchase and/or sale of certain securities, with an obligation of the purchase and/or sale of these securities at the prices announced by the person pursuing such activity. Activity in the management of securities shall be deemed performance by a legal person or individual business person, in his own name, for a remuneration, during a stated period, of trust management of the following conveyed into his possession and belonging to another person, in the interests of this person or of third parties designated by this person:

1)securities; 2)monies intended for investment in securities; 3)monies and securities received in the process of securities management. Clearing activity shall be deemed activity in determining mutual obligations (collection, collation and correction of information on security deals and

preparation of bookkeeping documents thereon) and in offsetting these obligations in deliveries of securities Depositary activity shall be deemed the rendering of services in the safekeeping of certificates of securities and/or recording and transfer of rights to securities Activity in the keeping of a register of owners of securities shall be deemed collection, fixing, processing, storage and provision of data constituting a system of keeping the register of security owners Provision of services directly promoting conclusion of civil-law transactions with securities between participants in the securities market shall be deemed activity in the arrangement of trading on the securities market.

Stock exchange
From Wikipedia, the free encyclopedia

Financial markets

Public market

Exchange Securities Bond market

Bond valuation Corporate bond Fixed income Government bond High-yield debt Municipal bond

Stock market

Common stock Preferred stock Registered share

Stock

Stock certificate Stock exchange Voting share Derivatives market

Credit derivative Futures exchange Hybrid security Securitization Over-the-counter

Forwards Options Spot market Swaps

Foreign exchange

Currency Exchange rate Other markets

Commodity market Money market Reinsurance market Real estate market Practical trading

Clearing house

Financial market participants

Financial regulation Finance series

Banks and banking Corporate finance Personal finance Public finance

A stock exchange is a form of exchange which provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends. Securities traded on a stock exchange include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it must be listed there. Usually, there is a central location at least for record keeping, but trade is increasingly less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of increased speed and reduced cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets are driven by various factors that, as in all free markets, affect the price of stocks (see stock valuation). There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of a global market for securities.

Philippine Stock Exchange

Type

Stock exchange

Location

Pasig City, Philippines

Coordinates

143322N 121122E

Founded

December 23, 1992

Owner

The Philippine Stock Exchange, Inc.

Key people

Jos T. Pardo, Chairman

Currency

Philippine Peso ()

No. of listings

344 (2012)

MarketCap

10.204 trillion (February 2013) $255.104 billion (2013)

[1]

Website

www.pse.com.ph

The Philippine Stock Exchange (Filipino: Pamilihang Sapi ng Pilipinas) (PSE: PSE) is the national stock exchange of thePhilippines. It is one of the oldest stock exchanges in Southeast Asia, having been in continuous operation since its inception in 1927. It currently maintains two trading floors, one at its headquarters at the PSE Plaza Ayala Triangle, Ayala Tower One in Makati City's Central Business District, and one at the Philippine Stock Exchange Centre (Tektite Towers), Ortigas Center in Pasig City. The PSE is composed of a 15-man Board of Directors, chaired by Jos T. Pardo. The main index for PSE is the PSE Composite Index or PSEi, which is composed of thirty (30) listed companies. The selection of companies in the PSEi is based on a specific set of criteria. There are also six additional sector-based indices.

Trading on the PSE trading starts at 9:30 am PHT and ends at 12:00 pm, pauses for a 1 hour 30 minute break, and resumes trading from 1:30 pm to a 3:30 pm session closure.

History
The Philippine Stock Exchange was formed from the countrys two former stock exchanges, the Manila Stock Exchange (MSE), established on August 8, 1927, and the Makati Stock Exchange (MkSE), which was established on May 27, 1963. Although both the MSE and the MkSE traded the same stocks of the same companies, the bourses were separate stock exchanges for nearly 30 years until December 23, 1992, when both exchanges were unified to become the present-day Philippine Stock Exchange. In June 1998, the Securities and Exchange Commission (SEC) granted the PSE a "Self-Regulatory Organization" (SRO) status, which meant that the bourse can implement its own rules and establish penalties on erring trading participants (TPs) and listed companies. In 2001, one year after the enactment of the Securities Regulation Code, the PSE was transformed from a non-profit, non-stock, member-governed organisation into a shareholder-based, revenue-earning corporation headed by a president and a board of directors. The PSE eventually listed its own shares on the exchange (traded under the ticker symbol PSE) by way of introduction on December 15, 2003. [edit]Business On January 4, 1993, the former Manila Stock Exchange started the computerization of its operations using the Stratus Trading System (STS) with a company called Equicom. On June 15, the former Makati Stock Exchange adopted the MakTrade trading system. Both systems were linked on March 25, 1994 to produce a One Price-One Market exchange. Two years later, on November 13, 1995, the implementation of the Unified Trading System (UTS) allowed the use of a single-order-book system on a MakTrade software where all the orders are posted and matched in one computer. In October 2004, the Securities Clearing Corporation of the Philippines (SCCP), a clearing and settlement agency for depository eligible trades, became a wholly owned subsidiary of the PSE. The SCCP acts as the settlement coordinator and risk manager for broker transactions as well as administrator of the trade guaranty fund. In 2005, the PSE adopted an online daily disclosure system (ODiSy) to improve the transparency of listed companies and ensure full, fair, timely and accurate disclosure of material information from all listed companies. The ODiSy provides a 24/7 online system access for the submission of all types of disclosures. On July 26, 2010, the PSE launched its new trading system, PSEtrade, which replaced the MakTrade system. The system was acquired from the New York Stock Exchange. [edit]Record

highs

On March 2, 2012, the PSE Composite hits 5,000 mark the highest record close. However, in December 12, 2012, almost ten months after, it neared the 5,800 mark closing in 6,000 near the end of the year. On January 7, 2013, the PSE Composite gets to all time record at 6,000 mark. After almost a 30-day [2] period, the stocks broke again another record on February 13, 2013 by reaching the 6,500 mark.

More than a month later, it again broke another record after Fitch Group upgraded the Philippines for the [3] first time to Investment-Grade status by ending the trading day at 6,847.47. [edit]Indices

and components

The PSE has eight constituent indices: PSE All Shares Index (ALL) PSE Composite Index (PSEi) PSE Financials Index (FIN) PSE Holding Firms Index (HDG) PSE Industrial Index (IND) PSE Mining and Oil Index (M-O) PSE Property Index (PRO) PSE Services Index (SVC)

The PSEi is the main index of the PSE, while the All Shares Index is the broader index of the exchange. The remaining six indices are sector indices based on a company's main source of revenue. Although listed in an index, companies are listed on the PSE under the First Board, Second Board or the Small and Medium Enterprises Board based on market capitalization. As of February 6, 2013, the Philippine Stock Exchange has 344 listed companies with a total market [4] capitalization of US$255.1 billion. There are also 134 trading participants registered at the PSE.

Over-the-counter (finance)
From Wikipedia, the free encyclopedia

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (June 2010)

Over-the-counter (OTC) or off-exchange trading is done directly between two parties, without any supervision of an exchange. It is contrasted with exchange trading, which occurs via these facilities. An exchange has the benefit of facilitating liquidity, mitigates all credit risk concerning the default of one party in the transaction, provides transparency, and maintains the current market price. In an OTC trade, the price is not necessarily made public information. OTC trading, as well as exchange trading, occurs with commodities, financial instruments (including stocks), and derivatives of such. Products traded on the exchange must be well standardized. This means that exchanged deliverables match a narrow range of quantity, quality, and identity which is defined by the exchange and identical to all transactions of that product. This is necessary for there to be transparency in trading. The OTC market does not have this limitation. They may agree on an unusual quantity, for example. In OTC market contracts are bilateral (i.e. contract between only two parties), each party could have credit risk

concerns with respect to the other party. OTC derivative market is significant in some asset classes: interest rate, foreign exchange, equities, and commodities.[1]

OTC-traded stocks
In the U.S., over-the-counter trading in stock is carried out by market makers using inter-dealer quotation services such as OTC Link (a service offered by OTC Markets Group) and the OTC Bulletin Board (OTCBB, operated by FINRA). The OTCBB licenses the services of OTC Link for their OTCBB securities. Although exchange-listed stocks can be traded OTC on the third market, it is rarely the case. Usually OTC stocks are not listed nor traded on exchanges, and vice versa. Although stocks quoted on the OTCBB must comply withU.S. Securities and Exchange Commission (SEC) reporting requirements, other OTC stocks have alternative disclosure guidelines (for example, OTCQX stocks through OTC Market Group Inc), and others have no reporting requirements, for example Pink Sheets securities. [edit]OTC

contracts

An over-the-counter contract is a bilateral contract in which two parties agree on how a particular trade or agreement is to be settled in the future. It is usually from an investment bank to its clients directly. Forwards and swaps are prime examples of such contracts. It is mostly done via the computer or the telephone. For derivatives, these agreements are usually governed by an International Swaps and Derivatives Association agreement. This segment of the OTC market is occasionally referred to as the "Fourth Market." [edit]Counterparty

risk

OTC derivatives can lead to significant risks. Especially counterparty risk has gained particular emphasis due to the credit crisis in 2007. Counterparty risk is the risk that a counterparty in a derivatives transaction will default prior to expiration of the trade and will not make the current and future payments required by [2] the contract. There are many ways to limit counterparty risk. One of them focuses on controlling credit [3] exposure with diversification, netting, collateralisation and hedging. The International Swaps and Derivatives Association suggested five main ways to address the credit risk arising from a derivatives transaction, as follows: avoiding the risk by not entering into transactions in the first place; being financially strong enough and having enough capital set aside to accept the risk of nonpayment; making the risk as small as possible through the use of close-out netting having another entity reimburse losses, similar to the insurance, financial guarantee and credit derivatives markets obtaining the right of recourse to some asset of value that can be sold or the value of which can be [4] applied in the event of default on the transaction

[edit]Importance

of OTC derivatives in modern banking

OTC derivatives are significant part of the world of global finance. The OTC derivatives markets are large and have grown exponentially over the last two decades. The expansion has been driven by interest rate

products, foreign exchange instruments and credit default swaps. The notional outstanding of OTC derivatives markets rose throughout the period and totaled approximately US$601 trillion at December [5] 31, 2010. In the past two decades, the major internationally active financial institutions have significantly increased the share of their earnings from derivatives activities. These institutions manage portfolios of derivatives involving tens of thousand of positions and aggregate global turnover over $1trillion. The OTC market is an informal network of bilateral counterparty relationships and dynamic, time-varying credit exposures whose size and distribution are tied to important asset markets. International financial institutions have increasingly nurtured the ability to profit from OTC derivatives activities and financial markets participants benefit from them. As a result, OTC derivatives activities play a central and [6] predominantly a beneficial role in modern finance. The advantages of OTC derivatives over exchange-traded ones are mainly the lower fees and taxes, and greater freedom of negotiation and customization of a transaction, as it involves only a seller and a buyer and no standardization authority. The NYMEX has created a clearing mechanism for a slate of commonly traded OTC energy derivatives which allows counterparties of many bilateral OTC transactions to mutually agree to transfer the trade to ClearPort, the exchange's clearing house, thus eliminating credit and performance risk of the initial OTC transaction counterparts.