Stock Market as a Market for Securities in The United States

Introduction

Stocks refer to groups of shares in a public limited company. Usually, a company forms stocks when all of its shares that belong to a particular category have been issued and fully paid for. The stock exchange market is therefore "the market where shares of quoted companies are exchanged through buying and selling" ( Morgan & Thomas, 1969). Companies that are not quoted cannot have their shares traded in the stock exchange market. In addition, the stock exchange market may also deal in government securities and stocks of local authorities. The stock exchange market plays a major role in the acquisition and dealings pertaining to securities. This essay discusses the role of the stock exchange market as a market for securities predominantly in the United States.

Role of the Stock Exchange Market

The stock exchange market facilitates the buying of shares. The market provides a conducive environment to investors interested in buying shares in various companies. In addition, it safeguards investors interests. This is achieved by requiring the companies that want to be quoted to attain certain standards of performance. The stock exchange market also monitors the performance of companies that are already quoted and those that are found not meeting the expectations are struck off of the register (Morgan & Thomas,1969).

Moreover, the United States government earns revenue by collecting fees and other dues from activities carried out in the stock exchange market. The market therefore forms a source of revenue for the government.Furthermore, the performance of securities in the stock exchange market may be used as an indicator of a country's economic progress. For example, a constant rise in prices and volume of securities traded in within a given period would indicate that the country's economy was positively growing at that time (Morgan & Thomas, 1969).

In addition, the United States stock exchange market as a market for securities promotes a saving culture of the US citizens. The stock exchange market of the US provides investors with an opportunity to channel their excess funds. Such people may act as role models to other members of the society who may emulate them hence promoting a saving culture (Morgan & Thomas, 1969).

In most cases, prices of goods and services are determined by the forces of demand and supply. The stock exchange market is capable of determining the equilibrium price of the securities. This enables both the buyers and sellers of goods and services to set prices that are not exploitative.

Conclusion

Conclusively, the stock exchange market as a market for securities is of great importance to the United States government. On top of creating employment opportunities for its citizens, the market promotes a saving culture, and acts as a source of government revenue.