Agents of Stock Exchange
The business in shares at a stock exchange is carried out only by members who are legally registered by the stock exchange council. Also, a company has to get permission from a stock exchange council before selling its shares in the market. The companies which have been authorised to sell their shares in a stock exchange are called quoted companies. There are various agents dealing in various shares. These include:-
Stock Jobbers: These are dealers who specialise in certain kinds of stocks and they make their money in the deals which they are able to arrange between buying and selling brokers. They trade in their own names, on their own account and do not deal directly with the public. They do not therefore work for commission but they earn income from the difference between the selling and purchase price. This is known as the jobber's turn.
Brokers: These are agents for the public who want to buy or sell stocks. They do not trade on their own account. It is their duty to get the best possible terms for their clients. When they have an instruction to buy or sell, they look for the jobber who will be the best buyer or the cheaper seller. Brokers earn commission or fees from their services. This fee is known as brokerage. Brokers also offer advice to their clients on possible investments.
Speculation of Stock Exchange
Speculators are buyers and sellers on the stock exchange who depend on chance or luck. They may be:-
Bears: These are investors who thinks that the price of certain stocks or shares will go down and rush to sell them at higher price with the hope of buying them back at a cheaper price.
Bulls: These are investors who believe that the price of certain stocks or shares will go up and rush to buy them now with a hope to sell them at a higher price later. The difference between the cost price and the selling price here is called a jobber's profit or jobber's turn. However, in some cases the jobber may speculate badly and incurs a loss instead of a profit.
Stags: These speculate in the same way as bulls buying it at a low price and selling at a higher price but concentrate on new issues. New companies normally contact stags when they want to sell new issues.