Understanding the Stock Market (PART 2).

The primary functions of the stock market includes providing a fair dealing in securities transactions, efficient pricing of securities, maintaining liquidity and enhancing regulations to protect investors.

The Securities and Exchange Commission (SEC) is the regulatory body responsible for regulating stock market activities in Ghana. SEC regulates the Ghana Stock Exchange and participants who transact business on the Ghana Stock Exchange. Participants on the stock market include the following;

• Licensed Dealing Members: Licensed Dealing Members also known as stock brokers are licensed professionals who buy and sell securities on behalf of investors. The broker act as intermediary between the stock exchange and investors by buying and selling shares on behalf of investors. Investors who want to buy listed shares on the Ghana Stock Exchange must do so through a Licensed Dealing Member.

• Custodian: Custodians are institutions which holds customers securities for safe keeping. This minimizes theft and loss of securities. The operation of custodian is sync with the stock exchange to transfer shares to trading accounts for trading.

• Fund Managers: Fund managers are professional who invest portfolios for clients. The fund managers conduct market and securities research and make recommendations to investors. Mutual funds, pension funds and institutional funds rely on the services of fund managers to make securities buying and selling decisions

The stock market plays a vital role in the economy by helping in capital formation. The market allows corporates and governments to raise capital through the issuance of securities. It also allows investors to share in the financials benefits of listed companies.