STOCK MARKET PARTICIPANTS

CLAUDINE JANE L. HIBAN

quantifies for preferential treatment

STOCK MARKET PARTICPANTS and lower fees

- Stock market participants are agents 2. Stockbrokers

who buy and sell backed securities
either directly or indirectly in a financial - stockbroker or trading participant is
exchange licensed by the Securities and Exchange
- There are two kinds of stock Commission (SEC) and is entitled to
participation; direct participation and trade at the Exchange
indirect participation - act as an agent between a buyer and a
1. Direct participation- occurs when seller of stocks in the market
entities buy or sell securities on its - they receive from their clients either a
own behalf on an exchange buying or a selling commission for their
2. Indirect participation- occurs when services
investor exchanges a stock on
behalf of an individual or Types of stockbrokers:
household
a. Traditional Brokers
Stock Market Participants:
- those who assign a licensed salesman to
1. Stock Investors handle your account and to take your
orders via a written instruction or a
- also referred to as stockholders or phone call
shareholders, are those who own shares - offer a wide array of services and
of stock of a publicly listed company products, including financial and
- they are accorded certain privileges like retirement planning, investing and tax
the right to fair and equal treatment, the advice, regular portfolio updates, and
right to vote and exercise related rights, margins to purchase investment
and the right to receive dividends and products on credit which will be
other benefits due to stockholders subjected to necessary terms and
- classified as either retail or institutional, conditions
local or foreign - offer personalized investment or trading
recommendations and services,
*Retail investor- a non-professional brokerages charges can be expensive
investor who buys and sells
securities, mutual funds, or b. Online or Discount Brokers
exchange traded funds through - those whose main interface is the
traditional or online brokerage internet where clients execute their
firms orders and access market information
online
- could be a better choice for the fee-
conscious investors who prefer to do it
all by themselves
- offer fewer services and/or support,
*Institutional investor- a person or brokerages often comes with lower fees
organization that trades securities in
large enough quantities that it 3. Stock Dealers
 security in order to facilitate trading in
- people or firms who buy and sell the security
securities for their own account - each market maker competes for
- they have all the rights and freedom customer order flow by displaying buy
regarding the buying and selling of and sell quotations for a guaranteed
securities number of shares
- seeks profit from the spread between the - market makers have to constantly update
bid and ask prices, while also adding prices to reflect market conditions
liquidity to the market (supply and demand)
- a dealer which charge a markup when - help ensure liquidity of a market by
selling from his or her own inventory offering to both buy and sell securities
because the dealer is a principal in the
account 7. Custodian

4. Investment bankers - institution holding customers’ securities

for safekeeping so as to minimize the
- represent companies in various risk of their theft or loss
capacities, such as private companies - operate in sync with the exchange to
that want to go public via an IPO or transfer shares to or from the respective
companies that are involved in pending accounts of transacting parties based on
mergers and acquisitions trading on the stock market
- they take care of the listing process in
compliance with the regulatory
requirements of the stock market COVID-19 Frauds Coming In Different Flavors,
- they conduct market research in the SEC Warns Investors
form of legal and market analysis before
the investment takes off Apr 10, 2020, 12:49pm

COVID-19 frauds are coming in different

flavors, the Securities and Exchange
Commission is warning today in an investor
5. Equity research analysts
alert.
- may be employed by stock brokerage From promoters boasting of companies that have
firms, mutual fund companies, hedge
developed (unproven) COVID-19 treatments to
fund, or investment banks
- individuals who research publicly- scamsters hyping “safe” commodities to
traded companies and attempt to charitable investment charlatans to affinity
forecast whether a company’s stock is fraudsters, crooks are employing a variety of
likely to rise or fall in price pitches to try to pick the pockets of investors,
- their primary role is to give the the SEC cautions.
recommendation to buy, sell or to hold
any financial securities and prepare a “We have become aware of a number of stock
report on the basis of the financial promotions, including online and through
statement of a company
unsolicited phone calls, claiming that products
6. Market Maker or services of publicly-traded companies can
prevent, detect, or cure COVID-19, and that the
- firm that accepts the risk of holding a stock of these companies will dramatically
certain number of shares of a particular
increase in value as a result,” the Commission research the organization to find out as much as
points out in the alert. you can,” the alert cautions.

The alert adds to be wary of rumors on social The SEC is also urging investors to be on the
media of companies converting operations to look out for crooks trying to win over victims
COVID-19-related support, or legislative through appeals for common traits they share
stimulus packages and related industries that such as ethnicity, nationality, religion, sexual
supposedly benefit from the current crises. orientation, military service, and age.

Bidding up the price of the fraudulent “Fraudsters may be (or pretend to be) part of the
investments and then selling before the truth very group they are trying to cheat. They may
comes out and the price plummets. enlist group leaders to spread the word about the
scheme. Those leaders may not realize the
“Microcap stocks may be particularly vulnerable “investment” is actually a fraud, which means
to pump-and-dump schemes because there is they too may be victims,” the alert points out.
often limited publicly-available information
about microcap companies’ management, Presenting another fraud flavor, the SEC warns
products, services, and finances as well as some scamsters promote of phony “high interest
limited institutional interest in those rate” Certificates of Deposit (CDs) through
companies,” the SEC says. internet advertising and “spoofed” websites –
websites that mimic the actual sites of legitimate
Often in crises there is a rush to hard assets such financial institutions.
as gold and silver, but the alert advises investors
to be particularly vigilant of fraudsters taking Spoofed websites may use URL addresses
advantage of this psychology in volatile similar to those of legitimate firms’ websites, or
markets. use legitimate-sounding names and URLs, the
alert explains.
Fraudsters also try to use psychology in their
favor to prey on the desires of many to help
others in the pandemic by pretending the
investments they are promoting will provide
financial support or medical treatment to
victims.

“If you are considering participating in an

investment offered by a charity that claims to be
a tax-exempt or “501(c)(3)” organization, check
out the organization’s tax status on the Tax
Exempt Organization Search on the Internal
Revenue Service’s website,” the SEC urges.

But buyer beware.

“Even if a charity has 501(c)(3) status, this does

not mean the investment is a legitimate
opportunity – it still could be part of a fraudulent
scheme. Ask questions and independently
  Chen, J. (2020, February 28). Stock
Market. Retrieved from
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ockmarket.asp

 Pseacademy_administrator (2011,
September 17). Who are the Market
Participants?. Retrived from
www.pseacademy.com.ph/LM/investors
~details/id-
1316273868284/Who_are_the_Market_
Participants.html

 The Greatrnk (2010, June 3).

Participants of the Stock Market.
Retrieved from
https://www.google.com/amp/s/greatrnk
.wordpress.com/2010/06/03/participants
-of-the-stock-market/amp/

 Knutson, C. (2020, April 20). COVID-

19 Frauds Coming In Different Flavors,
SEC Warns Investors. Retrieved from
https://www.google.com/amp/s/www.fo
rbes.com/sites/tedknutson/2020/04/10/c
ovid-19-frauds-coming-in-different-
flavors-sec-warns-investors/amp/

 Types of stock brokers (2019, December

19). Retrieved from
https://investyogi.com/Blog/Types-of-
stock-brokers

 Cautero, R. (2019, November 23). What

is Market Maker and Why Do We Need
Them?. Retrieved from
https://www.google.com/amp/s/finance.
yahoo.com/amphtml/news/market-
maker-why-them-220934239.html

 Kenton, W. (2019, May 28). Dealer.

Retrieved from
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ealer.asp

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