How Are Shares Traded In Public Limited Company (PLC)s?

How Shares are Traded in Public Limited Companies (PLCs)

1. Stock Exchanges: Public Limited Companies (PLCs) list their shares on stock exchanges like the NYSE and LSE, where these regulated platforms facilitate the trading of securities by connecting buyers and sellers.

2. Brokerage Firms: Both individual investors and institutions depend on brokerage firms to carry out trades on their behalf, with these firms serving as intermediaries to facilitate the purchase and sale of shares on stock exchanges.

3. Trading Accounts: Investors open trading accounts with brokerage firms, allowing them to execute share orders through online platforms, mobile apps, or brokers.

4. Market Orders and Limit Orders: Investors have the option to place various types of orders. Market orders execute at the current market price, while limit orders establish specific buying or selling prices set by the investor.

5. Bid and Ask Prices: Shares are traded on the stock exchange, where the bid price is the highest a buyer will pay, and the asking price is the lowest a seller will accept. Trades happen when these prices match.

6. Order Matching: Stock exchanges match buy and sell orders, executing trades when prices align, with this process occurring continuously throughout the trading day.

7. Trading Hours: Stock exchanges maintain designated trading hours for buying and selling shares, and while these hours may differ by exchange and location, they typically adhere to a regular trading day schedule.

8. Ticker Symbols: Every listed company is assigned a distinct ticker symbol representing its shares on the exchange, which investors utilize to place orders for individual companies.

9. Settlement: After a trade, there's a settlement process transferring shares and funds, typically taking a few days, with shares moving from the seller to the buyer.

10. Regulatory Oversight: Regulatory bodies like the SEC oversee stock exchanges to ensure fairness, transparency, and compliance with securities laws.

11. Market Data: Real-time market data, including share prices and trading volumes, is widely available to investors, enabling them to make informed trading decisions.