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markets - SECURITIES TRADING STOCK MARKETS Stocks are...

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SECURITIES TRADING STOCK MARKETS Stocks are traded on organized exchanges and also through networks of brokers and dealers (sometimes called "over-the-counter" markets). There are over a hundred stock markets in the world; some of the largest ones are described below. Primary and Secondary Markets When financial assets are first sold, they are traded in a primary market. For example, newly issued stock is placed by underwriters (typically investment banking firms), while government bonds are sold at Treasury auctions. The proceeds from the sale of new securities (net of underwriting costs) go to the issuer of the security, and the quantity issued determines the total supply of the security. Subsequent to the initial placement, the securities are traded on secondary markets such as stock exchanges and in over-the-counter markets. These trades are among investors who wish to alter their portfolios. The original issuer does not receive any proceeds from secondary trades, and the total supply of the security is not altered. The secondary equity markets may be classified as: Organized Stock Exchanges Over-the-Counter (OTC) Market The Third and Fourth Market The organized Stock Exchanges There are nine major stock exchanges in the US. Of these the New York Stock Exchange (NYSE) is the largest. The other exchange which is national in scope is the American Exchange (AMEX) which is also located in New York city. The other seven exchanges are regional in scope and provide a market for the trading of shares of local firms that may not be able to meet the listing requirements of national exchanges. Each exchange has specific rules by which trade takes place. Important international markets, in terms of total market value, include the London Stock Exchange (LSE), the Tokyo Stock Exchange (TSE), the Hong Kong Stock Exchange, the Paris Bourse, and the Frankfurt Stock Exchange. The New York Stock Exchange The NYSE, located on Wall Street in New York City, is perhaps what jumps first to mind when one thinks about stock markets. It is the largest stock exchange in the world, and is where about 70% of U.S. equity trading takes place.
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