Difference Between Stock Market and Share Market: Explained
The stock market and the share market are two different terms that are often used interchangeably. Although both refer to the market where stocks are bought and sold, there are significant differences between the two. In this article, we will discuss the differences between the stock market and the share market.
Definition
The stock market refers to a collection of exchanges and markets where shares of publicly traded companies are bought and sold. In other words, it is the market where stocks, which represent ownership in a public company, are traded. On the other hand, a share market is a place where shares of a specific company or a group of companies are traded.
Scope
The stock market is broader in scope than the share market. It includes all publicly traded companies, which means that anyone can buy shares in any of these companies. The share market, on the other hand, is usually limited to a specific group of companies, such as those in a particular industry or geographic region.
Trading
Trading in the stock market and the share market is usually done through a broker. However, the processes differ slightly. In the stock market, shares are traded on an exchange, such as the New York Stock Exchange (NYSE) or Nasdaq. Investors place orders to buy or sell shares through their broker, who then sends the order to the exchange. In the share market, shares are traded over-the-counter (OTC), meaning that there is no central exchange. Investors usually trade shares through their broker, who deals directly with other brokers representing the seller.
Regulation
Both the stock market and the share market are regulated, but the level of regulation differs slightly. The stock market is heavily regulated by the government, which has strict rules and guidelines that must be followed. The share market, on the other hand, is regulated by the market itself, although there are still rules and regulations that must be followed.
Risk and Reward
Both the stock market and the share market carry risks and rewards. However, the level of risk and the potential reward differ based on the companies listed in each market. The stock market is generally considered to be less risky, as it includes a large number of companies and is well regulated. The share market, on the other hand, can be more risky, as it often includes smaller companies that are not as well-established as those listed in the stock market.
In conclusion, while the terms stock market and share market are often used interchangeably, there are significant differences between the two. The stock market includes all publicly traded companies, while the share market is usually limited to a specific group of companies. The processes for trading and regulation also differ between the two markets, as do the risks and rewards involved in investing. It is important for investors to understand the differences between these two markets before investing in either.
Table difference between stock market and share market
| Stock Market | Share Market |
|---|---|
| The stock market is where shares of publicly traded companies are bought and sold. | The share market is a general term used to refer to any market where shares of any company or corporation are bought and sold. |
| It includes the New York Stock Exchange, NASDAQ, and other major stock exchanges. | It includes both stock exchanges and over-the-counter markets where shares are traded. |
| The stock market is regulated by the SEC (Securities and Exchange Commission). | The share market may or may not be regulated depending on the country or region. |
| Investors can buy and sell shares of individual companies. | Investors can buy and sell shares of individual companies as well as exchange-traded funds (ETFs), mutual funds, and other types of securities. |
| The stock market is considered to be more volatile and risky than the share market. | The share market can also be volatile but may be considered less risky than the stock market due to the wider range of investments available. |