What is Share Market ?

Share market refers to a place where shares are traded. Traders and Investors can buy or sell shares in this market. It’s not necessary you have to go to these markets. Trading can be done online.

Companies issue their IPO to collect funds for the business in Primary Market. After company allots shares to the buyers. These shares are traded in secondary market. Which are of two types OTC Market and Stock Exchange.

OTC Market

Over-the-counter  or OTC refers to a market place where you can trade via a dealer network as opposed to on a centralized exchange. Normally in lay man language anything traded between two parties without involvement of exchange or third party is an OTC trade. Around the globe OTC trade volume is more than exchange based trade.

In general, the reason for which a stock is traded over-the-counter is usually because the company is small, making it unable to meet exchange listing requirements. Also known as “unlisted stock”, these securities are traded by broker-dealers who negotiate directly with one another over computer networks and by phone.

Financial instruments such as govt. bonds do not trade on a formal stock exchanges. If an investor wants to buy or sell a bond, he or she must call a bank or broker that deals in bond.

Stock Exchange

It’s another marketplace in which stock or share, derivatives and other financial instruments are traded. The core function of an exchange – such as a stock exchange – is to ensure fair and orderly trading, as well as efficient dissemination of price information for any securities trading on that exchange. Exchanges give companies, governments and other groups a platform to sell securities to the investing public.

In today’s date all major exchange provide online trading where any investor can buy or sell stocks online. Two biggest stock exchanges in India are NSE and BSE.