How are shares of a public limited company traded?

How are shares of a public limited company traded?

How are shares of a public limited company traded?

Trading shares of a public limited company (PLC) involves several steps, from the initial listing of the company on a stock exchange to the actual buying and selling of shares by investors. Here’s a comprehensive step-by-step explanation of how shares of a PLC are traded:

1. Listing on a Stock Exchange:

• Before shares of a PLC can be traded, the company must apply for listing on a stock exchange. This involves meeting the exchange’s listing requirements, which typically include criteria related to the company’s size, financial performance, corporate governance, and compliance with regulatory standards.
• The PLC applies to the stock exchange, providing information about its business operations, financials, ownership structure, and management team.
• The exchange evaluates the application and conducts a thorough review to determine whether the PLC meets the listing criteria. If approved, the company’s shares are listed for trading on the exchange.

2. Market Making:

• Once listed, the PLC’s shares are available for trading on the secondary market. Market makers, also known as liquidity providers, play a crucial role in facilitating trading by quoting bid and ask prices for the shares.
• Market makers continuously buy and sell shares on behalf of investors, providing liquidity to the market and narrowing the bid-ask spread, which is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept.

3. Order Placement:

• Investors who wish to buy or sell shares of the PLC place orders through brokerage firms, which act as intermediaries between investors and the stock exchange.
• Investors can place different types of orders, including market orders, limit orders, and stop orders, depending on their trading objectives and preferences.

4. Order Matching:

• When an investor places a buy order, it is matched with a sell order from another investor or market maker. Similarly, when an investor places a sell order, it is matched with a buy order from another party.
• Stock exchanges use electronic trading systems to match buy and sell orders based on price and time priority. The exchange ensures fair and orderly execution of trades while maintaining market integrity.

5. Trade Execution:

• Once a buy order is matched with a sell order, the trade is executed, and shares are transferred from the seller’s account to the buyer’s account.
• The exchange calculates the trade price based on the prevailing market price at the time of execution. The trade is then recorded, and confirmation is sent to both parties.

6. Settlement:

• After trade execution, the settlement process begins, where the actual transfer of shares and funds takes place.
• Settlement typically occurs on a T+2 basis, meaning shares are delivered and payment is made two business days after the trade date. This allows time for clearing and processing of transactions.

7. Post-Trade Reporting:

• Stock exchanges provide post-trade reports that summarize trading activity, including details of executed trades, trade volume, price movements, and other relevant data.
• Investors and market participants use these reports for analysis, monitoring market trends, and making informed investment decisions.

How do I buy shares in a public limited company?

How do I buy shares in a public limited company?

Buying shares in a public limited company (PLC) involves several steps. Here’s a simplified guide on how you can buy shares in a PLC:

1. Choose a Brokerage Firm: The first step is to open an account with a brokerage firm or stockbroker. You can choose from traditional full-service brokers or online discount brokers. Consider factors such as trading fees, account minimums, research tools, and customer service when selecting a brokerage firm.
2. Fund Your Account: Once you’ve chosen a brokerage firm, you’ll need to fund your brokerage account. You can do this by transferring funds from your bank account to your brokerage account. Most brokerage firms offer various funding options, including wire transfers, electronic funds transfers (EFTs), and checks.
3. Research and Select Stocks: Before buying shares, conduct research on the PLCs you’re interested in investing in. Consider factors such as the company’s financial performance, industry outlook, competitive position, management team, and growth prospects. You can use financial websites, research reports, and investment newsletters to gather information.
4. Place an Order: Once you’ve identified the PLCs you want to invest in, log in to your brokerage account and place an order to buy shares. You’ll need to specify the number of shares you want to buy and the price at which you’re willing to buy them. You can place different types of orders, including market orders, limit orders, and stop orders, depending on your trading strategy.
5. Monitor Your Investment: After placing your order, monitor your investment regularly to track the performance of the PLCs you’ve invested in. Keep abreast of any news or developments that may affect the companies’ stock prices. You can use your brokerage account’s portfolio tracking tools or third-party financial websites to monitor your investments.
6. Review Your Portfolio: Periodically review your investment portfolio to assess its performance and make any necessary adjustments. Consider rebalancing your portfolio if your investment objectives or risk tolerance change. You may also consider selling shares if you no longer believe in the long-term prospects of a PLC.
7. Consider Professional Advice: If you’re new to investing or unsure about which PLCs to invest in, consider seeking professional advice from a financial advisor or investment advisor. They can help you develop an investment strategy based on your financial goals, risk tolerance, and time horizon.

Auriga Accounting specifically helps in defining “traded share public limited company.

Auriga Accounting specifically helps in defining “traded share public limited company.

1. Financial Analysis: Auriga Accounting analyzes the financial statements of public limited companies to assess the trading activity of their shares. This analysis could involve examining trading volumes, liquidity, price movements, and other relevant financial metrics.
2. Market Research: Auriga Accounting conducts market research to identify public limited companies whose shares are actively traded on stock exchanges. This could involve tracking market trends, investor sentiment, analyst reports, and industry news to understand the trading dynamics of these companies.
3. Valuation Services: Auriga Accounting provides valuation services to determine the fair value of traded shares of public limited companies. This could involve using various valuation methods, such as discounted cash flow analysis, comparable company analysis, and precedent transactions analysis.
4. Regulatory Compliance: Auriga Accounting assists public limited companies in complying with regulatory requirements related to the trading of shares. This could include ensuring compliance with securities laws, stock exchange rules, disclosure obligations, and insider trading regulations.
5. Investor Relations: Auriga Accounting helps public limited companies in managing their investor relations activities related to share trading. This could involve communicating with shareholders, analysts, and other stakeholders about the company’s performance, financial results, and growth prospects.
6. Financial Reporting: Auriga Accounting assists public limited companies in preparing financial reports and disclosures related to share trading. This could include quarterly and annual reports filed with regulatory authorities and stock exchanges, as well as other financial disclosures required by accounting standards.
7. Transaction Support: Auriga Accounting provides transaction support services for public limited companies involved in corporate actions that impact the trading of shares. This could include mergers, acquisitions, divestitures, initial public offerings (IPOs), share buybacks, and other capital market transactions.