Stock Markets: Structure, Trading, and Economic Role

Stock Market Definition and Ownership

A stock market, also called an equity or share market, is the collective marketplace where buyers and sellers trade stocks that represent ownership claims in businesses. It includes securities listed on public stock exchanges as well as privately traded shares, such as those offered through equity crowdfunding. Stock exchanges facilitate these transactions by matching buyers and sellers, supporting price discovery, providing trading information, and helping ensure settlement. Stocks may be traded electronically, on physical trading floors, or over the counter through dealers. Owning stock gives an investor an equity interest in a company and may provide returns through price appreciation and dividends, although ownership also involves market risk. Participation can be direct, through personally owning shares, or indirect, through mutual funds, exchange-traded funds, pension plans, and retirement accounts. Stock ownership is distributed unevenly: wealthier and higher-income households generally participate more and hold larger amounts, while participation is also influenced by education, taxes, transaction costs, social factors, demographics, and access to financial information.

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Stock Exchanges and Over-the-Counter Trading

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