{"concept":{"id":3,"slug":"stock-exchange","term":"Stock exchange","shortDefinition":"An organized, regulated financial market where shares of listed companies are bought and sold.","longDefinition":"A stock exchange doesn't set share prices by its own decision: the price emerges from the meeting of buy and sell orders from participants. It is supervised by a regulator (in Spain, the CNMV) that oversees transparency and investor protection. Most trades happen in the secondary market, between retail or institutional investors -- not directly with the issuing company, which only receives new capital in the primary market (the initial IPO and, later, any capital increases)."},"relations":{"requirement":[{"concept":{"id":4,"slug":"listing","term":"Listing","shortDefinition":"The situation in which a company's shares are publicly traded on a stock exchange, at a price that updates according to supply and demand.","longDefinition":"To start trading publicly, a company carries out an IPO (Initial Public Offering) -- the process by which it sells part of its capital to outside investors for the first time. In exchange for accessing financing from many investors, the company takes on real transparency obligations: publishing audited accounts periodically and disclosing material events as soon as they occur, all of it overseen by the market regulator."}},{"concept":{"id":5,"slug":"stock-market-index","term":"Stock market index","shortDefinition":"An indicator that summarizes, in a single number, the combined performance of a specific group of stocks -- usually the most representative ones on an exchange, in a country, or in a sector.","longDefinition":"An index is not a stock you can buy directly: it's an aggregate measure, calculated according to each index's own rules (which companies it includes, how it weights each one, how often it reviews its composition). It serves as a quick benchmark for market performance and as a comparison point for portfolios and funds, but it doesn't measure a country's economy as a whole, nor does it include every company listed on an exchange."}}],"contrast":[],"related":[{"concept":{"id":2,"slug":"financial-market","term":"Financial market","shortDefinition":"A mechanism that connects those with savings available to those who need financing, through the exchange of financial assets (stocks, bonds, currencies, among others).","longDefinition":"A financial market doesn't exchange goods or services like a consumer market -- it exchanges financial assets. It serves three functions: it channels savings toward productive investment, it provides liquidity (the ability to turn an investment back into cash), and it sets prices through the meeting of supply and demand. The stock exchange is one of the best-known financial markets, but others exist too: the fixed-income market (bonds), the currency market, and the commodities market, among others."}},{"concept":{"id":6,"slug":"share","term":"Share","shortDefinition":"A security that represents a proportional part of a company's ownership -- whoever holds it is a part-owner of that company, in the proportion that share represents of the total.","longDefinition":"Buying a share is not lending money to the company (that's what bonds are): it's acquiring a portion of its ownership. As a shareholder, you're entitled to a proportional part of the profits if the company pays dividends, and in principle to a vote at the shareholders' meeting -- although in practice that vote carries little weight if your stake is small compared to other shareholders. A share's value isn't set by the company: it's determined by the market, through the same supply-and-demand mechanism that sets the price of any asset in a financial market."}}],"calculatedBy":[]},"curricularPosition":[{"id":3,"moduleId":2,"slug":"how-do-stock-exchanges-work","title":"How do stock exchanges work?","summary":"You understand what a stock exchange is, what role it plays as a regulated institution, and how a stock's price is determined within it.","bodyMarkdown":"## Objectives\n\nBy the end of this lesson you understand what a stock exchange is, what role it plays as a regulated institution, and how a stock's price is determined within it.\n\n## Content\n\nA stock exchange is an organized, regulated financial market specifically dedicated to trading shares of companies listed on it. \"Organized\" means it follows clear rules about how trades are executed; \"regulated\" means a supervisory body oversees that those rules are followed and that participants receive truthful information -- in Spain, that body is the Comisión Nacional del Mercado de Valores (CNMV).\n\nA very common misconception is thinking that the exchange \"sets\" a stock's price, as if it were a catalog with prices decided in advance. That's not how it works: the price continuously emerges from the meeting of buy orders and sell orders from all participants. If at a given moment more investors want to buy a stock at the current price than investors are willing to sell it, the price tends to rise; if the opposite happens, it tends to fall. The exchange simply organizes that meeting in an orderly and transparent way -- it doesn't decide the outcome.\n\nIt's important to distinguish two different moments in a stock's life on the exchange:\n\n- **Primary market**: when a company sells shares for the first time (its IPO, or a later capital increase) and receives the money directly from the buyers.\n- **Secondary market**: all subsequent trades, in which investors buy and sell shares among themselves. The company no longer receives that money directly -- ownership of part of it simply changes hands.\n\nThe vast majority of the trades you see reflected in a stock's price, day to day, happen in the secondary market, between investors -- not between an investor and the company.\n\n## Example\n\nThe Madrid Stock Exchange, the New York Stock Exchange (NYSE), and the Nasdaq are real examples of stock exchanges. Each organizes trading for the shares of the companies listed on it, with its own hours, admission rules, and trading systems -- but on all three, the underlying mechanism is the same: matching buy and sell orders to form a price.\n\n## Common mistakes\n\n- Thinking that the exchange sets a stock's price as if it were a catalog -- the price emerges from participants' buy and sell orders, not from a decision by the exchange.\n- Confusing buying a stock in the secondary market with giving money directly to the company -- you're almost always buying it from another investor, not from the issuing company.\n\n## Summary\n\nA stock exchange is an organized, regulated market where shares of listed companies are bought and sold. Each stock's price emerges from the meeting of supply and demand, not from a decision by the exchange or the company. Most trades happen in the secondary market, between investors -- not directly with the company.\n\n## Self-check\n\nWho really sets a stock's price on an exchange?\n\nWhat's the difference between the primary market and the secondary market?","bodyHtml":"<h2>Objectives</h2>\n<p>By the end of this lesson you understand what a stock exchange is, what role it plays as a regulated institution, and how a stock's price is determined within it.</p>\n<h2>Content</h2>\n<p>A stock exchange is an organized, regulated financial market specifically dedicated to trading shares of companies listed on it. &quot;Organized&quot; means it follows clear rules about how trades are executed; &quot;regulated&quot; means a supervisory body oversees that those rules are followed and that participants receive truthful information -- in Spain, that body is the Comisión Nacional del Mercado de Valores (CNMV).</p>\n<p>A very common misconception is thinking that the exchange &quot;sets&quot; a stock's price, as if it were a catalog with prices decided in advance. That's not how it works: the price continuously emerges from the meeting of buy orders and sell orders from all participants. If at a given moment more investors want to buy a stock at the current price than investors are willing to sell it, the price tends to rise; if the opposite happens, it tends to fall. The exchange simply organizes that meeting in an orderly and transparent way -- it doesn't decide the outcome.</p>\n<p>It's important to distinguish two different moments in a stock's life on the exchange:</p>\n<ul><li><strong>Primary market</strong>: when a company sells shares for the first time (its IPO, or a later capital increase) and receives the money directly from the buyers.</li><li><strong>Secondary market</strong>: all subsequent trades, in which investors buy and sell shares among themselves. The company no longer receives that money directly -- ownership of part of it simply changes hands.</li></ul>\n<p>The vast majority of the trades you see reflected in a stock's price, day to day, happen in the secondary market, between investors -- not between an investor and the company.</p>\n<h2>Example</h2>\n<p>The Madrid Stock Exchange, the New York Stock Exchange (NYSE), and the Nasdaq are real examples of stock exchanges. Each organizes trading for the shares of the companies listed on it, with its own hours, admission rules, and trading systems -- but on all three, the underlying mechanism is the same: matching buy and sell orders to form a price.</p>\n<h2>Common mistakes</h2>\n<ul><li>Thinking that the exchange sets a stock's price as if it were a catalog -- the price emerges from participants' buy and sell orders, not from a decision by the exchange.</li><li>Confusing buying a stock in the secondary market with giving money directly to the company -- you're almost always buying it from another investor, not from the issuing company.</li></ul>\n<h2>Summary</h2>\n<p>A stock exchange is an organized, regulated market where shares of listed companies are bought and sold. Each stock's price emerges from the meeting of supply and demand, not from a decision by the exchange or the company. Most trades happen in the secondary market, between investors -- not directly with the company.</p>\n<h2>Self-check</h2>\n<p>Who really sets a stock's price on an exchange?</p>\n<p>What's the difference between the primary market and the secondary market?</p>","sortOrder":2,"readingMinutes":5,"difficulty":"Básico","url":"/en/academy/fundamentals/introduction-to-markets/how-do-stock-exchanges-work"}],"graphSummary":{"root":{"type":"concept","id":"3","depthFromRoot":0,"entity":{"type":"concept","slug":"bolsa-de-valores","term":"Bolsa de valores","excerpt":"Mercado financiero organizado y regulado en el que se compran y venden acciones de empresas que cotizan en él."}},"depth":1,"returnedNodes":1,"truncated":false,"hasCycle":false,"nodes":[{"type":"concept","id":"3","depthFromRoot":0,"entity":{"type":"concept","slug":"bolsa-de-valores","term":"Bolsa de valores","excerpt":"Mercado financiero organizado y regulado en el que se compran y venden acciones de empresas que cotizan en él."}}],"edges":[]},"relatedNews":[],"relatedEntities":[]}