Securities Operations: A Guide to Trade and Position Management

2

The Securities Marketplace

2.1 INTRODUCTION

In any street market, the goods that are sold are manufactured outside of the marketplace and the characters involved are those who visit the marketplace in order to buy goods and those who reside within the marketplace in order to sell those goods.

A direct comparison can be made with the securities marketplace as follows:

• the goods (securities) are originated by organisations (issuers of securities) outside the marketplace;
• investors visit the marketplace in order to buy and sell securities, either directly or via an agent;
• STOs reside within the marketplace in order to sell securities to and buy securities from investors and agents;
• the marketplace provides the infrastructure to allow trading to occur, within a regulated environment.

Figure 2.1 illustrates such relationships.

Figure 2.1 The securities marketplace: overview

The various goods, the roles of the

• issuers
• investors
• agents acting on behalf of investors
• STOs
• securities markets and exchanges

and the inter-relationships between them are described within this chapter.

2.2 SECURITIES

Organisations occasionally need to raise cash (or capital) in order to expand their business through, for example, buying new premises, building new factories or acquiring other companies. The options open to such organisations for raising the necessary capital include:

• borrowing cash from banks, ...