The term stock market refers to the business of buying and selling a company’s common stocks. Investors agree to buy stock in a company in exchange for entitlement to dividends that may be issued by a company. A stock market is the part of the financial market where equity instruments are traded. Stock markets (or exchanges) are formal organizations and in the US they are approved and regulated by the Securities Exchange Commission (SEC). Within the stock market there are three trading systems: major national stock exchanges (i.e. NYSE); regional stock exchanges (i.e. Midwest Stock Exchange); and the over-the-counter (OTC) market where multiple market makers trade stock while linked together electronically.
Developed and some non-developed countries have their own stock markets to buy and sell stocks in their national companies. The stock markets in the United States, Japan, and the United Kingdom are the largest in the world. Examples are the New York Stock Exchange, Nasdaq, Tokyo Stock Exchange, and London Stock Exchange.
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