What Is a Stock Market Security?
A stock market security refers to any of the securities that are traded on the stock market. When referencing the stock market, people usually mean all equity securities that are traded publicly. In America, the stock market is open to the public from 9 a.m. until 4 p.m. on all business days that are not federal holidays. On these days any individual can purchase a security that trades within the stock market.
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History
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The first official stock market in America, and arguably the most famous, is the New York Stock Exchange (NYSE). The NYSE was officially formed in 1792 by 24 businessmen in New York City. Their goal was to ease the flow of capital between investors seeking returns and firms seeking money to expand operations. It achieved this goal as evidenced by rapidly increased interest of investors in the stock market as well as the ease at which companies have been able to raise capital through the market. The NYSE led the way for different markets through its success. Now there are hundreds of different exchanges where stocks are traded throughout the world. The world equity market is valued at around $50 billion today.
Definition of a Security
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It is pertinent to the discussion of stock markets to fully understand what a security means in financial terms. A security is a financial investment instrument, other than insurance, that is offered to investors. So a security refers to all types of investments, not only equities or stocks. Therefore, a bond is also referred to as a financial security, but is not included as a stock market security.
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Stocks and Equity
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Stocks and equities refer to the same idea. The concept is that an investor believes a company has an especially bright future and wants to share in the company's future profits. The most direct way for an investor to share in these profits is to purchase stock, or equity, in the company. By purchasing a stock in the company, you then own that share of all the company's future profits or losses.
Buying Stock in a Company
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For individual investors, the way to purchase stock in a company that is publicly traded on the stock market is through a stock broker. Traditionally, stock brokers have been professionals who help individual investors attain their investment goals on a one-on-one basis. This treatment is expensive and the new trend is toward cheaper online platforms that allow you to trade stock at a much lower rate per trade.
Securities Exchange Commission
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The Securities Exchange Commission (SEC) is the body in America responsible for regulating the stock market and other exchanges. The SEC's mission is to protect consumers from misleading and illegal financial securities including all stock market securities. All companies that wish to sell shares on the stock market must register with the SEC and follow the SEC's guidelines.
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