securities market [finance]

8/2/2019 Securities Market [Finance]

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CHAPTER 12

Prepared by Group 3

March 2, 2012 / FRIDAY


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Is a conduit for distribution of outstanding issues of securities.

It is an economic institute which take place the sale and

purchase of security base on the demand and supply of the

economy.

There are two components of securities market:A. Auction-Type Market

A-1. International Stock Exchange

A-2. National Stock Exchange

B. Negotiation-Type MarketB-1. Over-The-Counter Market


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A system in which buyers enter competitive bid and sellersenter competitive offers simultaneously.

Quick, swift trading and open-topublic.

Auction is preferred means for many investors, because of the

excitement of bidding process. The securities are sold to the highest bidders.

Examples of AUCTION-TYPE MARKETS:

International and National Stock Exchange.

NYSE the largest stock exchange in the world as of 2005.

PSE smallest stock exchange as of 2005.


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the Stock Exchange is the organization

that provides the facilities for the buyingand selling of securities like stocks, bonds

and derivatives.

The Philippine Stock Exchange (PSE) is

the only operating stock exchange in thePhilippines and has two trading floors

located at the PSE Centre in Pasig City

and at the PSE Plaza in Makati City.

Sectors of Philippine Exchange

A. Banks and Financial Services

B. Commercial, Industrial and Services

C. Property

D. Mining

E. Oil

F. Holding Firms


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Company Name CODE SECTOR

CENTURY PROPERTIES

GROUP INC.CPG Property

ZEUS HOLDINGS, INC. ZHI Holding Firms

LEPANTO MINING A LC Mining

PHILIPPINE ESTATES

CORPPHES Property

MANILA MINING-A MA Mining

BOULEVARD

HOLDINGS, INC.BHI Holding Firms

DIZON COPPER-SILVER

MINES, INC. DIZ Mining

LEISURE & RESORTS

WORLD CORPLR Services

WATERFRONT PHILIPPINES,

INCWPI Services

VITARICH CORPORATION VITA Industrial

Company Name CODE SECTOR

GREENERGY HOLDINGS

INCGREEN Industrial

MRC ALLIED INC MRC Property

STA LUCIA LAND SLI Property

PLDTCOMMUNICATIONS

AND ENERGY

VENTURES, INC

PCAV Services

ATOK BIG WEDGE AB Mining

ALPHALAND CORP ALPHA Industrial

CEBU AIR INC CEB Services

INTEGRATED MICRO-

ELECTRONICSIMI Industrial

HOLCIM PHILIPPINES HLCM Industrial

PHILIPPINE STOCK

EXCHANGE INC.PSE Financial

GAINERS: LOSERS:


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OTC is also known as market for unlisted securities, because the

company is small or unable to meet the exchange listingrequirements.

These securities are traded by middlemen like Broker, Dealer,Salesmen, and Associated person through use of e-mails,telephone, and any other means of communication.

They negotiate the final price.

Broker - is the person who engaged in buying and selling securitiesfor account of others.

Dealer - any person who buy and sell securities for his/her account.

Salesman - is a natural person, employed as an agent by a dealer.

Associated Person of Broker/Dealer an employee who directlyexercise the control of authority.

***ALL OF THESE PERSON ARE REQUIRED BY THE LAW TOREGISTERED with Securities and Exchange Commission & all of thetransaction should be in legal terms.***


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1. Exchange transactions are carriedout on the floor by its members.

2. The facilitator of exchange in stock

market is called Broker, usually paid bycommission.

3. Securities are exposed to public, lessselling effort is required.

4. Complete record of transaction isavailable almost immediately to allparticipants.

STOCK EXHANGE OVER-THE-COUNTER

1. Dealers acts as principals.

2. The facilitator in OTC market iscalled dealer and earned by selling atmark-up

3. Securities are NOT exposed topublic, more selling effort isrequired.

4. Bid and asked prices are madeavailable to interested parties.


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Investment cost (2,000 shares x P5.00) P10, 000.00

Add:

Brokers' commission (10,000.00 x 1.5%) 150.0010% VAT on brokers' commission 15.00Transfer fee 100.0010% VAT on transfer fee 10.00PCD fee (10,000.00 x 0.00009174) 0.92Documentary stamp tax

[(2,000 shares x P1.00) x P1.50] 15.00200

Total cost of the transaction P10, 290.92

Illustration 1: Buying securities

If we assume that an investor buys 2,000 shares of stock at amarket price of P5.00 per share with a par value of P1.00, the

computation for the total cost of the transaction is as follows:

.


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Sale proceeds (500 shares x P20.00) P10, 000.00

Less:Brokers' commission (10,000.00 x 1.5%) 150.0010% VAT on brokers' commission 15.00Stock transaction tax (10,000.00 x 0.005) 50.00Cancellation fee 20.0010% VAT on the cancellation fee 2.00PCD Fee (10,000.00 x 0.00009174) 0.92

Net amount to be received P9, 762.08

Illustration 2: Selling securities

For an investor who sells 500 shares at a market price of P20.00 per share,

the computation is as follows:


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Trading at the PSE is from 9:30 a.m. to 12:00 noon in a

continuous session daily, except Saturdays and Sundays, legal

holidays and days when the Banko Sentral ng Pilipinas (BSP)

Clearing Office is closed.

PRICE OF STOCKS and METHOD OF TRADING:

The price of stocks and volume of trading securities market vary

from day-to-day depending on the demand and supply and the

Method of transaction between buyer is a double auctionmarket.


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The end.

securities market [finance]

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