Stocks

● Shares represent units of ownership in a company that entitle shareholders a

proportionate claim on the company’s assets and earnings.

● Common shares entitle holders voting rights to participate in corporate

decisions such as election of board members & receive dividend payments i.e.
portion of firm’s earnings distributed to owners. They are last in terms of priority
to receive payment in the event of a liquidation.

● Preferred shares do not grant holders voting rights but provide them priority
over common shareholders when it comes to receiving dividends & payments
from asset distribution during a liquidation.

● Companies issue stocks through initial public offerings (IPOs), enabling them to
raise capital by selling ownership stakes to the public.

● After the IPO, stocks are traded on stock exchanges, allowing investors to buy
and sell shares at market-determined prices.

● Authorized Capital: The total value of the stated maximum number of shares
that have been authorized for issue by the firm when it is first incorporated.

○ Entire authorized capital need not be raised immediately. In practice, often

a portion of what has been authorized is held for issue at a later date, if
and when the firm should require further additional capital.

○ Thus, what is actually issued is less than or equal to what is authorized

and the amount that is actually raised is referred to as issued capital.

● Outstanding capital: The total value of the shares being held by investors.

○ In most cases, outstanding capital is the same as issued capital.

○ However, in the event of a share buyback, the amount of outstanding

capital will decline and will therefore be less than the issued capital.
● Authorized shares: refers to the max number of shares that a company is
permitted to issue. Includes currently issued stock, stock that management has
approved to be released but is not trading (being held on company’s books) and
stock options that have been granted.

● Outstanding shares: Includes all shares that are held by shareholders,

company insiders like managers and directors, as well as Institutional investors.
This number may change due to:

○ Selling of company shares to raise capital for projects or ongoing

operations (often referred to as an equity financing or secondary offering).

○ Exercising of employee stock options (which increases the number of

outstanding shares)

○ Share buybacks (or share repurchase plan) which reduces the number of
outstanding shares and in turn boost the price of the company’s stock and
change its EPS ratio (becomes higher).

● Equity Float: Is the number of shares available for trading of a particular stock.
Low float stocks are those with a low number of shares.

○ Floating stock is calculated by subtracting closely held shares and

restricted stock from a firm’s total outstanding shares.

○ Closely held shares are those owned by insiders, major shareholders,

and employees. Restricted stock refers to insider shares that cannot be
traded because of a temporary restriction, such as the lock-up period after
an initial public offering (IPO).

○ A stock with a small float will generally be more volatile than a stock with a
large float. This is because, with fewer shares available, it may be harder
to find a buyer or seller. This results in larger spreads and often lower
volume.

○ The free float measures the maximum number of shares available for
purchase by investors on the market, which are not tied up in corporate
cross-holdings, government stakes, treasury stock, etc.
 ○ The size of a company’s float will generally affect how volatile a
stock will be, especially when there is a news event.

○ Low float stocks often make the daily biggest % gains since a
substantial surge in buying volume relative to the low number of shares
being traded daily will tend to drive share prices exponentially higher on
any given day.

○ Low float companies usually have a float of around 10 million shares or

less.

● Par value: Simply the face value of the common stock.

○ Has no significance in practice and in countries like the U.S., its value can be fixed at a low
and random level.

○ Many companies in the United States choose to issue stocks with very low par values
because, as per the regulations of certain states, the cost of incorporating a firm is based
on the par value of the shares being registered.

○ Hence, such fees can be minimized by assigning low par values.

● Paid-up capital: The amount paid by investors per share multiplied by the number of shares
issued.

● Sometimes, companies may ask the shareholders to pay up a fraction of the issued capital and call
for the balance later the future, example:

○ Firm is authorized to issue 250k shares with a par value of $10 each but has instead
chosen to issue 150k shares to investors.

○ Hence, the authorized capital is at $2.5million while the issued capital is at $1.5million.

○ Suppose the shareholders were only asked to pay $8 per share, then the paid-up capital
will only be $1.2million (150k shares x $8)
 ○ If for some reason the firm finds itself facing financial difficulties, the creditors can demand
that the shareholders pay up the difference between the issued capital and the paid-up
capital, which is $300k in this case ($1.5mil - $1.2mil)

○ Note: If the authorized shares had a zero-par value instead, then the entire contribution
from the shareholders will be treated as the share premium, and the firm won’t be able
to demand that the shareholders contribute additional capital.

● For no-par value stock, the board of directors will assign a value to the stock each time they raise
capital.

○ These are popular with small organizations where the owners issue themselves a number
of shares and simply infuse the money into the corporation when needed.

○ Because there is no stated price for the stock, the directors can raise the price when the
firm becomes more valuable.

● The issue share price need not be equal to its par value and will often be in excess of its par
value.

○ This is true for companies that are already established at the time of issue.

○ The excess of the issue price over the par value is referred to as the share premium.

○ Example: Corporation is issuing 100,000 shares with a par value of $5 at a price of $12.50
per share. If the issue is successful, the company will raise $1,250,000 from the market. In
the balance sheet, $500,000 would be reported as share capital and $750,000 would be
reported as the share premium.

● If shares are issued at the par value, the transaction would be recorded as follows:

○ Assume 100,000 shares are issued at a par value of $10 each.

○ Common stock, which is a liability for the firm, will be credited with $1,000,000 and cash,
which is an asset, will be debited with $1,000,000.

○ However, if the shares are issued at a premium of $10 each, then the common stock
account will be credited with $1,000,000 and the additional paid-in capital account will be
credited with $1,000,000.
 ○ Cash will of course be debited with $2,000,000.

● Book Value of a firm per share: Is the value of the firm obtained from the balance sheet i.e. the
value of the assets behind a share.

○ In practice, it is derived by adding up the par value, the share premium, and the retained
earnings and dividing by the number of shares issued by the firm.

● Market value of a firm: This is the value assigned to the shares of the company by the stock
market and is determined by multiplying the number of shares issued by the firm with the current
market price per share.

● Market capitalization: The total value of all of a firm’s outstanding shares i.e. Total shares
outstanding x Market price.

Voting Rights

● Most common arrangement is for a company to give the shareholder one vote per every share of
common stock held. In practice, shares with different voting rights can be issued.

● If there is only a single class of common shares, then all shareholders irrespective of their voting
privileges have an unlimited right to participate in the earnings of the corporation and an equal right
on the assets of the company upon liquidation

● All shares in a given class or category have equal standing, irrespective of the point in time
or the price which they are issued:

o For instance, if Alpha Corporation were to issue three years after its IPO, another 100,000
shares at $17.50 per share, then the newly issued shares will rank at par with the 100,000
shares issued earlier.

o In legal terms the two tranches are said to rank pari passu.

● When equity shares are separated into 2 or more classes with different voting rights, one or more
categories may have subordinated voting rights, and at times a category may be issued with no
voting rights.
 ● The purpose of such an exercise is to bestow the voting powers on a minority of shareholders who
can consequently control the company with less than a 50% equity stake.

● A group of shareholders can exert considerable influence over the affairs of their company if they
satisfy one of these criteria:

o They own more than 50% of the voting shares.

o When they have one or more representatives on the board of directors.

o When they themselves are directors of the company.

● In practice, minority shareholders have very little say in the affairs of their company, despite the
fact that they do enjoy voting rights. This is particularly true when the company is controlled by a
majority shareholder.

Proxies

● In order to vote, the investor must be a shareholder of record.

● Registrar of the firm maintains a record of its current shareholders and only those listed on the
corporation’s register of shareholders as of the record date will be considered as eligible
shareholders to vote.

● Therefore, in practice, it is possible that a person who happens to be a shareholder of record, by

virtue of their name appearing in the register on the record date, may have sold their shares prior
to the date of the meeting.

● In such cases the new owner who has acquired the shares cannot in principle vote, as their name
will not be reflected in the register. To get over this problem, the seller(s) of the shares can give a
proxy to the buyer(s).

● Since it is not realistic to expect a large percentage of the shareholders of large companies to
attend the annual meetings in order to be physically present to cast their votes, in practice,
 companies choose to send a proxy statement to absentee shareholders along with a ballot, prior to
the scheduled date of the meeting.

● The shareholders are expected to mark their preferences and return the ballot prior to the date of
the meeting.

● A typical proxy statement will include information on the individuals seeking appointment or
reappointment as directors, and details of any resolutions for which the opinions of the
shareholders are being sought, which is consequently the raison d'être for the vote.

● Once the ballots are received from the absentee shareholders, they will be collated, and a person
appointed by the firm will cast the votes as directed by the shareholders who have submitted the
ballots.

● In practice there is a critical reason why companies require shareholders to attend meetings or to
send proxies if they are unable to be physically present.

● This is because a quorum is required before any business can be transacted. That is, a
minimum number of shares must be represented at the meeting, either by the holders in person or
in the form of proxies.

Dividends

● Since shareholders are residual claimants, they can’t demand dividends from the firm which makes
payment of dividends not mandatory and at the discretion of the Board of Directors.

● Companies usually declare a dividend when they announce their results for a period.

● In the United States, since results are typically declared on a quarterly basis, dividends are also
announced every quarter. In the United Kingdom most companies pay their annual dividends in
two stages.

● 4 Important dates for dividend payments:

(1st Date) Declaration / Announcement date – Date on which the decision to pay a dividend is
declared by the directors of the company and the amount of the dividend is announced. Will also
mention a second date which is the Record date.

(2nd Date) Ex-dividend date – The first business day on which a share will trade without its
dividend.

o Prior to the ex-dividend date, the shares are said to be traded on a cum-dividend basis,
which means that the right to receive the dividend is inherent in the shares.

o Therefore, an investor who owned shares before and on the ex-dividend date will be
entitled to receive the dividend.

o On the ex-dividend date, the shares begin to trade ex-dividend, which connotes that
potential buyers will no longer be eligible to receive the next dividend if they were to
acquire the share.

o Thus, an investor who purchases shares on or after the ex-dividend date will not be
eligible to receive the forthcoming dividend.

o This is because it is too late for buyers' names to be included in the register as of the
record date, and consequently dividends will go to the parties selling the shares.

o On the ex-dividend date, the shares ought to in theory decline by the amount of the
dividend to reflect that they are trading without the dividend, if we assume there is no other
market moving news present.

o Thus, if the cum-dividend price is $75 per share at the close of trading on the day prior to
the ex-dividend date, and the quantum of the dividend is $3.50 per share, then from a
theoretical standpoint the market should open with a price of $71.50 on the ex-dividend
date.
 (3rd Date) Record Date – The business day on which a shareholder that is listed on the
company’s shareholder register records is deemed to have ownership of the company’s shares for
the purpose of deciding who can and who cannot receive a dividend when paid.

○ Typically 1 or 2 business days after the ex-date.

(4th Date) Payment Date – Date on which a company mails or transfers dividends to its
shareholders on record. Does not have to be on a business day, can occur on weekday or holiday
too.

Stock dividends

● Dividends that are distributed in the form of shares of common stock rather than in cash.

● Referred to as a bonus share issue in some markets.

● Capitalization of reserves: Involves transferring funds from the reserves and surplus account to
the share capital account in order to issue out additional shares as dividends.
 ● In theory, it does not create any additional value for an existing shareholder since it keeps the
investor’s % stake in the company unchanged after additional share issuance.

● From the company's perspective, this doesn’t signify any changes in the firm’s total asset base nor
does it imply any enhancement to the earnings capacity of the firm (no increase in retained
earnings) i.e. merely an accounting transaction with no economic impact.

● Stock share price should theoretically decline after a stock dividend is declared i.e. new price
equals the market cap (assumed unchanged in the absence of fundamental developments or
market moving news) divided by a new larger number of outstanding shares.

● Usually declared when a firm wants to “reward” its shareholders without having to face an external
outflow of cash due to reasons such as being short of funds or allowing available cash to be tied up
in productive investments.

● Example: Silverline Tech has 500k shares outstanding, and the price is $60 per share before
announcement. Firm announces a stock dividend of 20% and a cash dividend of $4 per share, with
the newly issued shares being eligible for the $4 dividend.

o Cum-stock dividend & cum-cash dividend price = $60, so market cap = $60 x 500k shs =
$30million

o Since stock dividend theoretically is market cap value neutral in principle, the market cap
after stock dividend should remain unchanged at $30 million.

o Thus, the theoretical price of an ex-stock dividend & ex-cash dividend share will be $46 =
($30million – 4 x 600,000 shs) / 600k shs

Treasury Stock and Share Repurchases / Buybacks

● Refers to shares that were at one point in time issued to the public but have been bought back by
the firm.

● These shares are currently held by the firm and can be subsequently reissued during times such
as if and when employees were to exercise their stock options.
● Treasury shares do not carry voting rights, are ineligible for dividends and are not included in the
denominator used for computing EPS (earnings per share).

● Companies may repurchase their shares when the directors of the firm perceive that the market is
currently undervaluing the shares, and consequently they would like to prop up the share price by
creating greater demand.

● For a given level of profitability, a buyback program serves to increase the EPS and if DPS
(Dividends per share) were to be kept constant, it would reduce the total amount of dividends the
firm needs to declare.

● Buybacks can also be an effective tool for defending against a potential hostile takeover by
corporate raiders by reducing the number of shares in circulation and allowing the current
management to acquire greater control of the firm.

● Another reason for buyback could be that the firm is unable to identify any profitable avenues to
invest their cash in, so return the excess cash to investors by offering to acquire their share at a
price higher than their original cost price.

● Suppose company A originally issued 100k shares with a par value of $5 and a price of $8 each:

o Initially: Cash would be debited with $800k, while common stock credited with $500k and
additional paid-in capital debited $300k.

o Following a share buyback of 20k shares at $9.50 per share i.e. $190k worth of
shares

▪ Under Cash method accounting: Cash will be credited with $190k, while the
contra-liability Treasury stock account will be debited $190k to offset the reduction
of cash on the assets side of the balance sheet.

▪ Under Par Value method accounting: Cash will be credited with $190k while
Treasury account would be debited with par value of 20k shares i.e. $100k, and
additional paid-in capital will be debited with 20k shares at $4.50 per share i.e.
$90k to offset reduction in cash.
Splits and Reverse splits

● An N:1 stock split implies that N new shares will be issued to the existing shareholders in lieu of
one existing share.

● E.g. A 5:4 split means that a holder of 4 existing shares will receive 5 shares after the split,
without having to invest any more additional funds i.e. similar effect as a 25% stock dividend.

● In the case of a stock split, the par value of existing shares is reduced and the number of shares
outstanding is correspondingly increased.

● The net result is that the issued capital remains unchanged, only the number of issued shares have
changed.

● Suppose a company has issued 100k shares with a face value of $100. If it were to announce a 5:4
split, then the number of issued shares would increase to 125,000, while par value would decline to
$80 per share.

● In practice, companies split their shares if the management perceives that the share price has
become too high in order for it to be affordable to a broad spectrum of investors, especially if the
exchange requires each stock to trade in a certain round lot size (e.g. 100 or 1000 shs per lot).

● N:M Reverse stock split / consolidation where M will be greater than N

o Suppose a company has 100k shares outstanding with a par value of $100 and announces
a 4:5 reverse split i.e. 4 new shares issued in return for every 5 existing shares

o Firm will subsequently have 80k shares outstanding, each with a par value of $125.

o Companies are likely to take this course of action if their management perceive that their
stock prices are too low and avoid breaching minimum price levels set by the exchange or
to avoid their shares looking like a penny stock.

● In practice, stock splits will usually result in a reduced DPS since the number of shares on which
dividends have to be paid has risen after the split.
 ●

Pre-emptive Rights

● Directors of a company must first obtain approval from existing shareholders in order to issue
shares beyond what has been issued earlier.

● Existing shareholders will be given the first right to buy the additional shares issued, in proportion
to the shares that they already own.

● Note that the right to acquire the shares is optional and not mandatory for the existing
shareholders.

● Thus, this requirement ensures that existing shareholders have a preemptive right to acquire
new shares as and when they are issued in order to keep their proportionate ownership in
the company unchanged.

● The rights issue is typically made at a price that is lower than the prevailing market price of the
share. If so, then the right gains a value of its own.

o The shareholder in this case can either exercise their rights and acquire additional shares
or sell the rights to somebody else.

o In most cases the discount from the prevailing market price is set between 10 and
15%.
 ● Rights issues must remain open for a specified number of days:

o During this period, it is possible that the market price may fall below the issue price set by
the company.

o In such circumstances, investors would not subscribe to the issue since they can always
acquire the shares for a lower price in the secondary market.

Theoretical Valuation of rights

● Suppose a company has 1 million shares outstanding and that shareholders are entitled to
purchase one new share for every 5 shares owned i.e. 1:5 rights issue (for Asia & Europe equities,
also applies to splits) or 6:5 rights issue (for U.S. equities, also applies to splits)], thus, the firm will
be issuing 200,000 shares (1,000,000 shares / 5) and the new outstanding number of shares will
be 1,200,000 shares (1mil shs + 200k shs).

● Assuming the prevailing market price is at $85 per share and that the additional shares are being
issued at discount at $55 per share, then cum-rights market cap will be $85 million and the rights
issue is expected to infuse an additional of $11 million (200k shares x $55) into the firm’s balance
sheet.

● Hence, the post-issue firm value in theory should be at $96 million ($85 million + $11million).

o Based on this the ex-rights share price would be:

 o In other words, the current shareholders are getting a share worth $80 in theory for just
$55.

o This implies that the value of a right to acquire one share is $25 = $80 - $55

o However, since the shareholder needs 5 shares to acquire the right to buy 1 share, the
value of a right is then $5 = $25/5

● At first glance it may seem that the issue of additional shares at a discount to their current value
would amount to a loss for the existing shareholders because while the cum-rights price is $85, the
ex-rights price is $5 lower at $80.

● However, since the existing shareholders had the chance to buy new shares at a discounted price,
this makes up for the decline in the price of a share following the rights issue.

● In both the event of an exercise of the rights and the sale of the rights for $5 per right, the
investor’s portfolio value will remain unchanged i.e. no loss or gain in wealth from the event.

● In practice, the ex-rights price may be higher than what we would expect from theory.

o This could be because the rights issue may be perceived as a signal of information
emanating from the firm.

o In reality, the very fact that the company has chosen to issue additional shares may be
construed as an indication of enhanced future profitability.

o A plausible reason could be that investors believe that the new funds raised will be used
for more profitable projects.

o Another line of argument could be that, considering the fact that cash dividends are usually
maintained at existing levels in the medium term, the additional shares from the
perspective of the shareholders are a sign of greater profitability from the existing
operations of the firm.
 o Both these factors could serve to push up the demand for the firm's shares, and hence
may lead to a situation where the ex-rights price, although lower than the cum-rights price,
is higher than what is predicted by theory.

Short Interest

● Short interest (no. of shares sold short & not covered) as a % of the total equity float is
used as a gauge for how much the market feels that the particular stock is overvalued.

● The level of SI is an indicator of the negative market sentiment for a stock.

● If SI < 5%, it may suggest that there is some level of negative sentiment albeit not an
extreme one.

● If SI > 20%, then it indicates that a significant number of traders have a negative view on
the stock and hold a strong conviction that its price will fall.

● As short interest increases, the potential for a short squeeze also increases. A short
squeeze occurs when a heavily shorted security receives considerable buying interest,
possibly due to some unexpected positive news.

● As buyers start to drive the price higher, holders of short positions begin to worry that
they may be forced to buy shares back at a higher price.

● They may then start to buy shares as well, which creates added buying pressure and
higher prices. A buying frenzy often ensues as momentum traders jump in to buy the
shorted security, subsequently sending prices even higher.
 ●
● The level of short interest can have some implications for the future price action of a
stock. While a high level of short interest indicates a negative sentiment, it can also be a
catalyst for a strong price increase (courtesy of a short squeeze).

● High levels of short interest should usually be treated as a red flag. Is it because of some
pending news event? Is the company being accused of alleged fraudulent activity? Or, is
it simply the general sentiment of the market that the company’s stock is very overpriced
at current levels?

● Nevertheless, a heavily shorted stock that is starting to pick up in price will definitely
increase the likelihood of a short squeeze.

Insider Buying and Selling

● Research has shown that insider trading activity can provide valuable insights on the
future direction of share prices.

● Insiders generally included company executives, major shareholders or directors of a

company.

● They could be aware of information which the public is not privy to such as new product
developments, cyclical market trends, production flow issues like bottlenecks and other
key factors that might impact the future financial performance of their company.
● There can be several reasons as to why insiders sell their stock holdings so when they
do it may not necessarily indicate that they think the prospects for their company are
bad.

● Trading Tactics:

○ Focus on the buys – It is said that “insiders sell for many reasons but insiders
usually only buy for one reason”. Insiders buy because they think the share price
is going higher.

○ Insiders are not always right, however, they do have the best insight into a
company’s future prospects.

○ Large transactions – Focus on the dollar value of the transaction. A token

amount in the neighborhood of $10,000.00 is not significant enough to get my
attention compared to, for example, an investment of $200,000.00 in shares.
Large transactions by insiders demonstrate that they are confident in the
company’s future.
 ○ The more insiders the better – the more insiders that are buying, the more
promising it may be if you follow suit. For instance, when you see a CEO, CFO
and director all buying shares in the same time frame, you can assume that there
is a consensus (and conviction) among them that the company’s shares are
going to be increasing in value.

○ Small to medium-sized companies are better – information in very large

companies is often spread around a lot and tends to be more siloed versus in
small to medium-sized businesses where insiders are privy to most if not all of
the information about the company.

○ Lots of sales can be a red flag – although the level of insider buying is of much
more importance in evaluating a potential trade than the level of insider selling is,
tons of selling by many different insiders can be a red flag.

○ This is especially true if the insiders are selling to the point where they are
holding little to no shares in the company. What message is this sending? If the
senior executives are selling every share they own as well as exercising and
selling their options, why would you want to own shares in that company?

○ In this type of situation, you could consider the company’s stock for a good short
opportunity.

○ If you do take a position on an insider trading signal, be prepared to give it time.

The insiders may be taking a position well in advance of any pending news
release events.

○ Recommended to stay the course but continually monitor other indicators like the
price action to help you determine if the trade is working out as you had hoped.

Major Stock Indices

● The stock market is an integral component of the global economy, serving as a

platform for companies to raise capital and for investors to grow their wealth.

● Stock market index is a financial benchmark that monitors the performance of a

group of stocks representing a specific market segment, industry, or the entire
market.
● Indices are essential for investors to evaluate market trends, compare individual
stock performance, and make informed investment decisions.

● Dow Jones Industrial Average Index (DJIA): A price-weighted index that

tracks the performance of 30 large, publicly-traded U.S. companies, often
referred to as "blue-chip" stocks including Apple, Boeing & Macdonald’s.

● S&P 500: A market-capitalization-weighted index comprising 500 leading U.S.

companies from diverse industries, representing roughly 80% of the total market
capitalization of the U.S. stock market including Alphabet Inc., Johnson &
Johnson, and Visa Inc.

● NASDAQ Composite: A market-capitalization-weighted index that includes over

3,000 companies listed on the NASDAQ stock exchange, primarily from the
technology and innovation sectors including Amazon.com Inc., Facebook Inc.,
and Tesla Inc.

● NASDAQ-100: A market-capitalization-weighted index of the 100 largest non-

financial companies listed on the NASDAQ stock exchange. It focuses on leading
technology and innovative companies, making it an essential benchmark for
tracking the performance of the tech sector including Apple Inc., Microsoft
Corporation, and Alphabet Inc.

● CAC 40: The benchmark index for the Euronext Paris stock exchange, the CAC
40 tracks the performance of the 40 largest French companies by market
capitalization including L'Oréal, Airbus, and BNP Paribas.

● DAX 30: As the leading index for the German stock market, the DAX 30
comprises the 30 largest and most liquid companies listed on the Frankfurt Stock
Exchange including BMW, Siemens, and Deutsche Bank.
 ● FTSE 100: Often referred to as the "Footsie," the FTSE 100 is the premier index
for the London Stock Exchange, representing the performance of the 100 largest
companies listed in the UK by market capitalization. Example components:
AstraZeneca, Unilever, and GlaxoSmithKline.

● CSI 300 (China 300) / SSE 50 (China 50): The CSI 300 index tracks the
performance of the 300 largest A-share companies listed on the Shanghai and
Shenzhen stock exchanges, while the SSE 50 focuses on the 50 largest and
most liquid A-share companies listed on the Shanghai Stock Exchange. Example
components: Industrial and Commercial Bank of China, China Construction
Bank, and Alibaba Group.

● Ibovespa: As the primary index for the São Paulo Stock Exchange in Brazil, the
Ibovespa tracks the performance of a portfolio of the most representative stocks
in the Brazilian market, covering about 70% of its total market capitalization.
Example components: Petrobras, Vale, and Itaú Unibanco.

Major Stock Exchanges

● Stock exchanges are organized marketplaces where stocks, bonds, and other
financial instruments are traded.

● They facilitate trading by providing a platform for buyers and sellers to interact,
determine prices, and execute transactions.

● New York Stock Exchange (NYSE): Established in 1792, the NYSE is the
world's largest stock exchange by market capitalization. It is home to numerous
large-cap U.S. and international companies. The exchange operates under an
auction-based trading model, utilizing designated market makers (DMMs) to
facilitate trades and maintain liquidity. DMMs are responsible for managing the
auction process, ensuring fair pricing, and mitigating potential market volatility.

● NASDAQ Stock Market (NASDAQ): Established in 1971, NASDAQ is the

world's second-largest stock exchange by market capitalization. It is known for
 listing technology and innovative companies, and it operates as an electronic,
dealer-based market, using market makers to facilitate trades. NASDAQ features
a fully automated trading system, ensuring faster and more efficient trade
execution compared to traditional floor-based exchanges.

● London Stock Exchange (LSE): The LSE, founded in 1801, is one of the oldest
and largest stock exchanges globally. It lists over 2,000 companies from around
the world and operates using a hybrid system that combines an electronic order
book with traditional market makers to ensure liquidity. LSE is home to the FTSE
100 Index, which tracks the performance of the 100 largest companies listed on
the exchange.

● Tokyo Stock Exchange (TSE): Established in 1878, the TSE is the largest stock
exchange in Asia by market capitalization. It lists more than 3,700 domestic and
international companies and uses an electronic trading system. The benchmark
index for the TSE is the Nikkei 225, which comprises the top 225 companies
listed on the exchange.

● Shanghai Stock Exchange (SSE): Founded in 1990, the SSE is the largest
stock exchange in China and the world's fourth-largest by market capitalization. It
lists over 1,000 companies and operates using an electronic trading platform.
The SSE Composite Index is the primary index for the exchange, tracking the
performance of all listed A and B shares.

● Euronext: Established in 2000, Euronext is a pan-European stock exchange that

operates markets in Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo, and
Paris. It lists more than 1,500 companies across various sectors and sizes, and
its flagship index is the Euronext 100, which tracks the performance of the top
100 companies listed on its markets.

● Frankfurt Stock Exchange (Germany): Operated by Deutsche Börse, the

Frankfurt Stock Exchange is the largest exchange in Germany and a leading
marketplace for securities trading in Europe.
● Borsa Italiana (Italy): As the primary stock exchange in Italy, Borsa Italiana is
operated by Euronext and is known for listing prominent Italian companies,
including those from the automotive, fashion, and banking sectors.

● Bolsa de Madrid (Spain): The Bolsa de Madrid is the largest and most
international stock exchange in Spain, serving as the primary trading platform for
Spanish securities, including stocks, bonds, and derivatives.

● Euronext Lisbon (Portugal): As part of the Euronext group, Euronext Lisbon is

the main stock exchange in Portugal, facilitating the trading of Portuguese stocks
and other financial instruments.

● Australian Securities Exchange (ASX): As the primary securities exchange in

Australia, the ASX is home to many leading Australian companies and offers a
range of financial products, including shares, bonds, and derivatives.

● SIX Swiss Exchange (Switzerland): As Switzerland's principal stock exchange,

SIX Swiss Exchange is known for its efficiency, stability, and listing of globally
renowned Swiss companies, including those in the pharmaceutical, banking, and
luxury goods sectors.

● B3 - Brasil Bolsa Balcão (Brazil): As the main stock exchange in Brazil, B3 is

located in São Paulo and is one of the largest financial market infrastructure
providers in the world. It offers a wide range of products and services, including
equities, fixed income securities, derivatives, and commodities. The benchmark
index for B3 is the Ibovespa, which tracks the performance of the most
representative stocks in the Brazilian market.

● Bolsa Mexicana de Valores (BMV) (Mexico): The BMV, or Mexican Stock

Exchange, is the principal stock exchange in Mexico, headquartered in Mexico
City. It facilitates the trading of stocks, fixed income securities, and derivatives for
both domestic and international companies. The BMV's primary index is the
Índice de Precios y Cotizaciones (IPC), which measures the performance of the
largest and most liquid stocks listed on the exchange.