stock exchange

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Stock Exchange

A place, whether physical or electronic, where stocks, bonds, and/or derivatives in listed companies are bought and sold. A stock exchange may be a private company, a non-profit, or a publicly-traded company (some exchanges have shares that trade on their own floors). A stock exchange provides a regulated place where brokers and companies may meet in order to make investments on neutral ground. The concept traces its roots back to medieval France and the Low Countries, where agricultural goods were traded for cash or debt. Most countries have a main exchange and many also have smaller, regional exchanges. A stock exchange is also called a bourse or simply an exchange.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

stock exchange

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

stock exchange

a MARKET which deals in the buying and selling of company stocks and shares and government bonds. See STOCK MARKET entry for fuller discussion.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

stock exchange


stock market

A MARKET that deals in the buying and selling of company STOCKS and SHARES and government BONDS. The stock exchange and the MONEY MARKET (which deals in short-term company and government securities) are the main source of external capital to industry and the government.

Institutions that are involved in the UK stock exchange include MARKET MAKERS (who act as JOBBERS and STOCKBROKERS), specialist stockbrokers, ISSUING HOUSES, MERCHANT BANKS and, as general buyers and sellers of securities, the CENTRAL BANK, COMMERCIAL BANKS, PENSION FUNDS, INSURANCE COMPANIES, UNIT TRUSTS and INVESTMENT TRUST COMPANIES, together with private individuals, industrial companies and overseas investors and institutions.

The stock exchange performs two principal functions. It provides:

  1. a primary or ‘new issue’ market where capital for investment and other purposes can be raised by the issue of new stocks, shares and bonds (see SHARE ISSUE), and;
  2. a ‘secondary’ market for dealings in existing securities, including forward dealings (see FUTURES MARKET), which facilitates the easy transferability of securities from sellers to buyers.

Day-to-day movements in the prices of shares (and other securities) are recorded by various SHARE PRICE INDICES (for example, the FTSE-100 share index).

The stock exchange thus occupies an important position in a country's FINANCIAL SYSTEM by providing a mechanism for channelling savings into physical and portfolio investment.

In the UK, the London Stock Exchange is the country's centre for dealings in securities, and the LONDON INTERNATIONAL FINANCIAL FUTURES EXCHANGE provides a market for commodities, currencies, etc.

In order to obtain a full listing or quotation on the London Stock Exchange for their shares, companies must satisfy various requirements, including proof of their financial standing and previous business history, and be prepared to issue at least 25% of their shares to the investing public. Additionally, more flexible arrangements have been introduced to allow smaller companies to raise capital without obtaining a full listing (see UNLISTED SECURITIES MARKET).

In recent years, stock markets worldwide, such as those based in London, New York, Tokyo, Zurich and Paris, have become increasingly interdependent with the growth of multinational companies, whose shares are traded on a number of exchanges, while financial institutions and securities firms themselves have become more internationally based. This has led to an increase in competitive pressures, which has brought about a number of important changes, particularly in the case of the UK stock exchange, including:

  1. the so-called ‘big bang’ - the termination (under the prodding of the OFFICE OF FAIR TRADING) of the cartel arrangements for fixing minimum commissions on securities transactions and the ending of the traditional division between the stockbroking and jobbing functions;
  2. various mergers and joint ventures between UK securities firms and international securities and banking groups so as to provide clients with a more diversified range of financial services and geographical spread;
  3. the computerization of dealing systems, using the Stock Exchange Automatic Quotations System (SEAQ), which provides a mechanism for linking buying and selling transactions on a global basis. This has largely transferred day-to-day business from a physical presence on the stock-exchange floor to telephone exchanges and the use of VDU computer terminals in dealing rooms.

In recognition of the growth in international dealings, the London Stock Exchange merged in the 1990s with the International Securities Regulatory Organization (ISRO), which represented the big international securities firms. In November 1999, a new competitive stimulus emerged when the London Stock Exchange set up a new sub-exchange (Techmark) for the listing of shares in high-tech companies, only to be followed days later by NASDAQ (the US high-tech stock exchange) setting up a rival exchange in London as part of its plan to build up a pan-European operation. In addition, the London Stock Exchange has faced competition from Tradepoint, an electronic stock exchange based in London and owned by a consortium headed by Reuters and a number of American investment banks and fund management groups. Like Nasdaq, Tradepoint aims to build a pan-European trading system.

In 2000 the Paris, Amsterdam and Brussels stock exchanges merged to form the ‘Euronext’ exchange, and SWX, the Swiss stock exchange, joined up with Tradepoint to form the Virt-X exchange. Also in 2000, a proposed plan to merge the London Stock Exchange and the Frankfurt Deutsche Bourse to form the ‘iX’ exchange fell through following a hostile takeover bid for the London Stock Exchange by the OM group, which also fell through. In 2005, however, the Deutsche Bourse put in a further bid for the LSE, with Euronext also putting in a hostile bid (watch this space!).

The UK stock market is regulated by the Financial Services Authority in accordance with various standards of good practice laid down by the FINANCIAL SERVICES ACT 1986. See CAPITAL MARKET, CITY CODE, SPECULATOR, SHARE PURCHASE/SALE, SHARE PRICE INDEX, INSIDER TRADING, PORTFOLIO, TRACKER FUND, INDIVIDUAL SAVINGS ACCOUNT (ISA).

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
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As a result of the Share Exchange, Pioneer will be the wholly owning parent company of Tohoku Pioneer as of the effective date of October 1, 2007 and the common stock of Tohoku Pioneer which will be a wholly-owned subsidiary will be delisted from the Tokyo Stock Exchange on September 25, 2007 (the final date of trading will be September 21, 2007) in accordance with the criteria for delisting of stock of the Tokyo Stock Exchange, Inc.
Announced today, immediately preceding the share exchange transaction, ISC closed a private placement of its capital stock, receiving approximately $11.2 million in gross proceeds, before payment of commissions and fees.The combined company will adopt both ISC's business strategy and that of its subsidiary, Lifeline Cell Technology LLC, based in Walkersville, Md., and will be lead by ISC's current management team.
The company noted that it issued a total of 25.2 million shares of common stock in the share exchange, 7 million of which were issued immediately preceding the exchange by Pacific Ethanol in connection with the completion of a private financing of common stock with investors at a price of $3 per share that yielded gross proceeds of $21 million.
Comment: After giving effect to the new Stellar shares issued in the share exchange, the former shareholders and option holders of Edesa own approximately 88% and the shareholders and option holders of Stellar prior to the share exchange own approximately 12% of the combined company on a fully-diluted basis, calculated in accordance with the share exchange agreement.
Immuno-oncology company Stellar Biotechnologies Inc (Nasdaq:SBOT) reported on Friday the launch of a share exchange agreement with Edesa Biotech Inc and the latter's shareholders, under which, Edesa will become a wholly-owned subsidiary of Stellar.
(NYSE: GIG.U), a Delaware corporation that is an emerging-growth blank check company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses, also known as a Special Purpose Acquisition company, or SPAC, has announced that holders of the company's public units may elect to separately trade the common stock, rights and warrants underlying such public units commencing on January 17, 2018, the company said.
(OTC: DIGA) said it has filed its Definitive 14C with the US Securities and Exchange Commission to satisfy the conditions of the share exchange agreement with VeriTeQ Acquisition Corp.
International Resource News-19 May 2010-Birch Branch inks Shun Cheng Holdings Hong Kong Share Exchange Agreement(C)2010 ENPublishing -
(SHP) decided at their respective board meetings today that SHP would become SDK's fully owned subsidiary through a share exchange arrangement.
and Re-Energy, LLC, as well as ethanol marketer Kinergy Marketing, LLC, in a stock-for-stock share exchange transaction.
Under the terms of the merger agreement, each share of FNIS common stock will be exchanged for a share exchange ratio of 0.830 shares of FNF common stock.