Where do I buy stock?
Published:Sunday | January 15, 2012 | 12:00 AM
QUESTION: I am a student currently attending the University of Technology. May I ask, if I was looking to purchase a share of stock, where in Jamaica would I need to go to do so?
– Marcia
PFA: You would go to a stockbrokerage company to buy stock. There are 11 stockbrokerages in Jamaica and each employs
several stockbrokers to buy and sell stock and carry out related functions. They also deal in other securities.
Only Jamaica Stock Exchange (JSE) members/dealers are authorised to trade on the exchange but you may choose to relate to other investment dealers who, in turn, will place the order with a stockbroker.
Stockbrokerage companies also deal in the stock of companies that are not listed on the exchange in what is called the over the counter market. Very little activity takes place on this market and you will not see such activity reported in the newspaper or hear it on the news.
Stockbrokerage companies also qualify to trade in securities because they are licensed by the Financial Services Commission to do so. Stockbrokers generally have a high level of expertise in analysing individual companies, the market, and the economy and are equipped to give investment advice.
That is not to say they are infallible and that they do not give advice that falls short. This is why it is prudent to get advice from more than one source and to do your own research as much as you are able.
It is best to have an open mind when you go to see a stockbroker. I know from experience that many potential investors go to see a stockbroker fully decided about what action they will be taking. Very often they just want the broker to confirm that they plan to do the right thing.
The names of some of the local stockbrokerages are listed in the Yellow Pages under ‘Stock and Bond Brokers’ but the exchange can also give you that information. Some are also listed under ‘Investment Advisory and Securities Service’, which also includes dealers who do not trade directly on the JSE.
Other services
What are the services offered by the stockbrokerages outside of buying and selling stocks for their clients or for their own account? They buy and sell money-market securities and bonds, give investment advice, do investment research, offer portfolio management service to investors who do not have the time or expertise to manage their own portfolio, and sell mutual funds as agents.
You may visit the websites of any of the brokerage companies to learn about them, read the brochures they publish, call them, or visit them. I am not aware that brokers require that you make an appointment to see them.
You will be charged a commission on your transactions and should discuss this with your broker before entering into a contract. Ask about other charges which are payable to the JSE, for example.
Be clear about payment arrangements before entering into any contract with a broker. Stock transactions should be settled three days after the trade but brokers usually require a deposit from new clients and other clients as well.
The broker will not necessarily complete your transaction the day you place the order. The broker cannot buy for you if there are
no sellers or sell if there are no buyers.
Do not be surprised if your order is not executed even if other trades take place. Your order will not be executed if your selling price is above or your buying price is below the price at which the stock trades that day.
There are several kinds of orders. A market order does not state a specific price and the broker is authorised to buy or sell at the price established by the market. A limit order is an order to buy or sell a stock at a specific price or better: sell at or at a higher price or buy at or at a lower price than stated in the order.
Appreciate the reality that the market is primarily for the long-term investor. While there is nothing wrong with buying and selling as you see opportunities for gain, bear in mind that each transaction costs.
■ Oran A. Hall, a member of the Caribbean Financial Planning Association and principal author of ‘The Handbook of Personal Financial Planning’, offers free counsel and advice on personal financial planning.
finviser.jm@gmail.com
several stockbrokers to buy and sell stock and carry out related functions. They also deal in other securities.
Only Jamaica Stock Exchange (JSE) members/dealers are authorised to trade on the exchange but you may choose to relate to other investment dealers who, in turn, will place the order with a stockbroker.
Stockbrokerage companies also deal in the stock of companies that are not listed on the exchange in what is called the over the counter market. Very little activity takes place on this market and you will not see such activity reported in the newspaper or hear it on the news.
Stockbrokerage companies also qualify to trade in securities because they are licensed by the Financial Services Commission to do so. Stockbrokers generally have a high level of expertise in analysing individual companies, the market, and the economy and are equipped to give investment advice.
That is not to say they are infallible and that they do not give advice that falls short. This is why it is prudent to get advice from more than one source and to do your own research as much as you are able.
It is best to have an open mind when you go to see a stockbroker. I know from experience that many potential investors go to see a stockbroker fully decided about what action they will be taking. Very often they just want the broker to confirm that they plan to do the right thing.
The names of some of the local stockbrokerages are listed in the Yellow Pages under ‘Stock and Bond Brokers’ but the exchange can also give you that information. Some are also listed under ‘Investment Advisory and Securities Service’, which also includes dealers who do not trade directly on the JSE.
Other services
What are the services offered by the stockbrokerages outside of buying and selling stocks for their clients or for their own account? They buy and sell money-market securities and bonds, give investment advice, do investment research, offer portfolio management service to investors who do not have the time or expertise to manage their own portfolio, and sell mutual funds as agents.
You may visit the websites of any of the brokerage companies to learn about them, read the brochures they publish, call them, or visit them. I am not aware that brokers require that you make an appointment to see them.
You will be charged a commission on your transactions and should discuss this with your broker before entering into a contract. Ask about other charges which are payable to the JSE, for example.
Be clear about payment arrangements before entering into any contract with a broker. Stock transactions should be settled three days after the trade but brokers usually require a deposit from new clients and other clients as well.
The broker will not necessarily complete your transaction the day you place the order. The broker cannot buy for you if there are
no sellers or sell if there are no buyers.
Do not be surprised if your order is not executed even if other trades take place. Your order will not be executed if your selling price is above or your buying price is below the price at which the stock trades that day.
There are several kinds of orders. A market order does not state a specific price and the broker is authorised to buy or sell at the price established by the market. A limit order is an order to buy or sell a stock at a specific price or better: sell at or at a higher price or buy at or at a lower price than stated in the order.
Appreciate the reality that the market is primarily for the long-term investor. While there is nothing wrong with buying and selling as you see opportunities for gain, bear in mind that each transaction costs.
■ Oran A. Hall, a member of the Caribbean Financial Planning Association and principal author of ‘The Handbook of Personal Financial Planning’, offers free counsel and advice on personal financial planning.
finviser.jm@gmail.com