Question

write a essay explaining the stock market structure in fiji

Answer 1

The stock market works on the same basic principal of supply and demand that any other market works on. When demand for a particular stock is high and supply is limited, price would tend to go up. And when demand is low and there are many sellers in the market, price is bound to drop. The price of a stock is a vital indicator of the company’s viability and it is also important to look at past performance together with future economic prospects of the company to determine which way the share price may go. The stock market tends to deliver long-term returns despite being volatile in the short term. No other investment vehicle is as closely and directly related to the many aspects of an economy as the stock market. Once you understand how it functions, stock investing can be a great way to generate income in years to come whether you want to save up for retirement, set up an income stream or become a major player in the stock market.

What is a Stock Market?

A stock market, like any other market is a place to buy and sell something, in this case - stocks. Only shares or other securities of companies that are listed on the stock exchange can be traded in the stock market. Securities may include convertible notes, bonds and other instruments. Once the company has issued or sold securities to the public, the stock exchange provides a centralized system through which buyers and sellers can trade in these securities. The stock market in Fiji exists as part of the larger financial market. The Reserve Bank of Fiji (RBF), which is the industry regulator not only carries out its regulatory task of ensuring fair and transparent capital markets supported by investor confidence but also plays a developmental role to create a more vibrant capital markets industry in Fiji. They supervise and regulate the Stock Exchange, Stockbrokers, Investment Advisers and Managed Funds in Fiji. You can only buy or sell securities in a listed company through a licensed broker. The three current stockbroking firms in Fiji are; Kontiki Stockbroking Limited (KSB), FijiStock Brokers Limited (FSB) and the FHL Stockbrokers Limited (FHS). These stockbroking firms have individuals acting as stockbroker representatives to provide brokerage services to their clients. A share registry also forms part of the stock market structure. It ensures that the list of security holders in a listed company is updated on an ongoing basis. If you buy securities on the stock exchange, registry will be responsible for cancelling the name and certificate of the person who sold their securities and update the list with your name and other details to reflect you as the new security holder, issuing a new certificate to you in the process.

Role of SPSE

The South Pacific Stock Exchange (SPSE) is the only licensed securities exchange in Fiji. The Exchange ensures that trading in all the SPSE listed securities takes place in an effective, fair and a transparent manner. Further to this, other major roles the SPSE plays are:

• Providing a centralized market place for trading securities. The Exchange provides a platform through its electronic trading facility where listed company securities can be bought and sold.

• Regulating the listed companies through our Listing Rules. Listing Rules ensures applicants are suitable for listing and that issue and marketing of securities are conducted in a fair, open and orderly manner. It also ensures that investors and the public are kept informed by listed companies and that all security holders of listed companies are treated fairly and equally.

• Regulating the stockbrokers through our Business Rules. While stockbrokers are licensed by RBF, the Business Rules further outlines the code of conduct and the responsibilities of brokers when dealing with investors’ money.

• Performing market surveillance to ensure that trading is fair to all investors.

• Ensuring timely disclosure of material market announcements in-order to keep the media, investors, analysts and other interested parties abreast with the current status and any developments pertaining to the listed companies

. • Disseminating information to the public in a timely manner. This is done through the SPSE website.