THE STOCK EXCHANGES

The exchanges are the physical locations where stocks are bought and sold. They are the sisters of the over-the-counter (OTC) market. The OTC is a conglomeration of telephone networks brokers use to sell stocks. Together, these two markets form the secondary market. The primary and secondary markets together make up the stock market.

Exchanges are located all over the world. The most famous one is the New York Stock Exchange. This exchange trades almost $12 trillion dollars worth of capital. Thousands of stocks are listed on this exchange. When you buy a stock, you will need to learn which exchange(s) list it.

The Securities and Exchange Commission (SEC) regulates stock trading and exchanges. The National Association of Securities Dealers (NASD) is a self-regulatory organization that also regulates securities trading, member firms and brokers. The NASD makes and enforces rules for its members and enforces federal securities acts and the SEC rules for its membership. As you read more about investing, you will become more familiar with these organizations and their protective regulations.

All the technicalities aside, turn now to learn what you as an investor get out of owning stocks, besides your percentage ownership of the company.