How are shares traded?

Shares in publicly listed companies are generally bought and sold through stock exchanges.

Stock exchanges bring buyers and sellers together and provide the infrastructure and rules required for transactions to take place.

Well-known exchanges include:

Today, most transactions take place electronically.

Individual traders normally access financial markets through a broker.

A broker provides the infrastructure needed to access available financial instruments, submit orders and manage positions.

Different brokers may offer different products and services.

Traditional brokerage models have included:

These may provide broader investment management and advisory services.

These may provide research or investment recommendations while leaving the final decision to the client.

These provide market access and execute instructions without providing personalised investment advice.

Online trading has made execution-only access increasingly common.

Traditional exchange-listed shares generally trade during the official trading session of their exchange.

For example, US shares listed on the NYSE or Nasdaq primarily trade during US market hours.

Some venues also support pre-market and after-hours sessions.

Trading hours matter because market liquidity and volatility can change considerably throughout the day.

Before shares can trade publicly, a private company may choose to become publicly listed through an Initial Public Offering, or IPO.

During an IPO, shares in the company are offered to investors and subsequently become available for trading on an exchange.

Going public can help a company:

Public companies are generally subject to disclosure and reporting requirements determined by the jurisdiction and exchange where they are listed.

Some companies distribute part of their profits to shareholders through dividends.

A dividend is a payment made by a company to eligible shareholders.

Not every company pays dividends.

Some businesses prefer to reinvest profits into expansion, research, acquisitions or other areas.