Stock Market Trading Participants

Prof. Jay G. Peñaflor, our speaker in the BusinessCoach’s How to Invest in the Stock Market seminar, lectured us who are the participants in the stock market trading. In the Philippine Stock Market settings, they are Philippine Stock Exchange (PSE), Publicly Listed Companies, Trading Participants or Stockbrokers, and Stockholders or Investors.

1. Philippine Stock Exchange (PSE)
The role of the PSE goes beyond bringing buyers and sellers together and facilitating sales and purchase of stocks. It makes sure that these transactions are done in an efficient , orderly, fair, and transparent manner. It enforces rules and regulations that its members (publicly listed companies and trading participants) must strictly abide by. In this way, the PSE fulfills its function as the guardians of the stock market.

The PSE also plays a key role in bringing about economic development by providing a centralized environment where companies in need of capital have easier access to funds through stock investors. Companies can sell their shares through Initial Public Offering (IPO) to potential investors. Through this, they can expand their business to produce more goods and services as well as create more jobs. The investing public can own a part of the company with the assurance that their investment interests are safeguarded by the PSE.

2. Publicly Listed Companies
A company becomes publicly listed when its shares are traded in the Philippine Stock Exchange. To become publicly listed company, a company must meet the stringent listing and reportorial requirements of the PSE to safeguard the investor’s interests and ensure transparency.

3. Trading Participants or Stockbrokers
A Stockbroker or Trading Participant acts as an agent/broker between buyer and seller of stocks in the stock market. A Trading Participant is licensed by the SEC (Securities and Exchange Commission) and is a member of the PSE, authorized to execute orders for purchases or sales of stocks.

4. Stockholders or Investors
Investors in stocks or stockholders are those who own shares of stocks of a publicly listed company, at least until the time that they decide to sell them. Stockholders are accorded certain rights set by the PSE. These rights are accorded to them by the company they have now become part owners of.

Learn How Publicly Traded Companies Stocks Traded >>>

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How Do I Start Investing in the Philippine Stock Market

In the BusinessCoach’s How to Invest in the Stock Market seminar I attended last April 16, 2011, Jay G. Peñaflor, a Philippine Stock Exchange Sr. Market Education Specialist, told us participants that getting started in the stock market is a simple process. He revealed to us the four-step process and i.e:

1. Choosing a stockbroker or trading participant.
2. Opening a stockbrokerage account.
3. Placing order to buy best stocks or sell stocks either online or by making a phone call to stock broker.
4. Monitoring and keeping tract of investments.

How do I Choose a Stockbroker?
Mr. Peñaflor told us that there are over 100 licensed stockbrokers accredited by the PSE. Our choice of stockbroker should depend on the type of service we will require and who will best suit our needs. The types of stockbrokers can be classified into Traditional and Online (via Internet).

Traditional brokers are those who assign a licensed salesman to handle our account and take our orders via a written or through phone call.

While Online brokers are those whose main interface with their customer is through the internet. Clients execute their orders and access market information directly online.

Stockbrokers vary in the range of services they offer and the types of customers they serve such as:
*Handling institutional or corporate accounts versus individual retail customers
*Providing advisory services
*Providing research and analysis
*Providing investor education seminars and market briefings

Mr. Peñaflor said that we can get a complete list of accredited stockbrokers of the Philippine Stock Exchange either by visiting www.pse.com.ph or contacting the PSE at (632) 688-7600.

Learn Who are the Stock Market Participants >>>

 

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Investing in Stocks: How Can You Make Money

Before attending the BusinessCoach’s How to Invest in the Stock Market seminar last April 16, 2011, I asked myself how can I make money in the stock market. And this question was answered by our speaker, Jay G. Peñaflor, a Philippine Stock Exchange Sr. Market Education Specialist and who is also a Certified Securities Specialist (CSS).

Mr. Peñaflor revealed to us 10 participants, how we can make our money grow in the stock market. He said that there are two ways to make our money grow in the stock market. With his detailed explanation, I understand that I can make money through capital appreciation or when there is an increase in the market price of my stocks and through dividends by the company I invested in. Read below Mr. Peñaflor’s explanation…

Two Ways to Make Your Money Grow in the Stock Market:

1. Through an increase in stock price or capital appreciation
Capital appreciation is an increase in the market price of your stock. It is the difference between the amount you paid when buying shares and the current market price of the stock. However, if the company doesn’t perform as expected, the stock’s price may go down below your purchase price.

2. Through dividends declared by the company
Dividends are paid out to shareholders, representing earnings of the company that is not going to be reinvested in their business. There are two types of dividends that can be given by companies: cash and stock dividends.

Cash dividends is the earning of every share of stock declared by the company. So, if the company declares a dividend of 25 centavos per share, a stockholder with 10,000 shares will receive a cash dividend of P2,500.00, gross of tax (Php 0.25 x 10,000) in cash.

Stock dividends are additional shares given to shareholders at no cost. If the company declares a 25 percent stock dividend, a stockholder with 10,000 shares will be entitled to an additional 2,500 shares of stock. These shares can also be sold anytime after the shares have been issued.

Mr. Peñaflor also revealed to us that Philippine Long Distance Company stocks has the highest market price of all Philippine Stock Exchange (PSE) listed companies. With big earnings, PLDT is one of the most profitable companies in the Philippines and no doubt it is also the best dividend paying stocks company in the Philippine Stock Market.

Additional post to read: When Should We Start Investing Money in the Stock Market >>>

 

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