Book-building process, or bookbuilding process

A buy order or a market order is the most straightforward way to buy and sell shares. It’s an instruction by an investor to a broker to buy or sell shares, bonds, or other assets at the best price currently available on the stock exchange. A market order is the default choice for buying and selling for most investors most of the time. When a market order is placed, the trade happens immediately at the current market price (or when the share market is next open). The price when an investors submits a buy order may differ slightly from the final price of the order due to after hours market movements, which occur when a market is officially closed.

Buy and hold is a ‘lazy smart’ approach to investing. The definition is in the name; you buy shares and hold (own) them for the long term. A buy and hold strategy gives investors the potential to benefit from compounding growth.

A bull market is a period of rising stock prices - like a charging bull pushing the market upward - often described as ‘bullish’. During a bull market, investors feel optimistic, and stock prices generally trend upward. Specifically, securities prices rise by 20% or more from previous lows. It’s usually a time of economic growth and positive sentiment. Key characteristics of a bull market include:

• Positive investor sentiment: Investors feel confident and hopeful; they expect further gains and are willing to invest
• Economic expansion: A strong economy drives stock prices higher; companies may thrive, leading to increased profits
• Rising individual securities: Company stocks across various sectors may see significant growth over sustained periods

Bull and bear market cycles are a normal part of share markets.

A brokerage is a financial firm, or middle agent, that buys and sells shares in companies, foreign money, and other assets for their customers. They're sometimes referred to as a 'broker'. They charge fees for their services. Charles Schwab, Vanguard, JP Morgan, Fidelity Investments and E*TRADE are all brokerages.

A broker sponsored arrangement refers to an agreement between a shareholder and licensed share broker (the sponsoring broker) or a settlement agent, where ASX-listed shares are held on the CHESS subregister and allocated a HIN. The CHESS subregister is maintained by ASX Settlement and is one of two ways a shareholder is identified as the legal owner of their portfolio of holdings - the other is an issuer sponsored subregister, which is typically maintained by the listing company that issued the shares, usually through an appointed share registry. The sponsoring broker manages securities transfers to and from an investor’s CHESS holdings, based on the shareholder’s instructions and under the terms of their sponsorship agreement. Read more about a sponsoring broker and the CHESS subregister here.

A broker is an individual, and a brokerage is a firm with multiple brokers. The term 'broker' is often used to describe both. A broker or brokerage acts as a middle agent between an investor and a securities exchange. In financial markets, brokers (or brokerages) make trades - buying and selling assets -based on customer requests. They may also provide other financial or management services, like market analysis or investment advice. There are two main types of broker:

• Full-service brokers: Offer a range of services, including making trades and providing investment advice. Morgan Stanley, Goldman Sachs, Bank of America and Merrill Lynch are full-service brokers.
• Discount brokers: These lower fee brokers made trades for clients but typically do not provide investment advice. They focus on cost-effective trading. Some well-known discount brokers include Fidelity Investments, TD Ameritrade and Tastyworks

In the US, full-service brokers register as financial advisors with FINRA or the SEC, in Australia they register with Australian Securities and Investments Commission (ASIC), and in New Zealand, they register with the NZX or the Financial Markets Authority (FMA).

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The book-building process is how the final issue or offer price for an IPO is decided based on demand and price that institutional investors indicate they’re willing to pay for each of the company’s shares. If investors want to buy into a company’s IPO, the issue price might be at the higher end of the price band or above it. If investors show less interest, the issue price might be at the lower end or below it.

Bonds are a type of asset class. A bond is a loan to a borrower that pays investors a specific percentage return over a set time frame. When you buy bonds, you are essentially loaning your money to a government or company - a bond issuer - for a specific amount of time that they will use for a specific purpose. Learn more about bonds.

Blockchain is a shared digital ledger that stores data. Unlike conventional databases that are centralised, blockchain is decentralised. Once a singular block is filled, it's linked to the previous one, forming a blockchain that can’t be altered. Blockchain technology is used in cryptocurrency systems to keep a secure and decentralised record of transactions. Blockchain is also used in supply chain management, smart contracts, decentralised finance (DeFi) and non-fungible tokens (NFTs).

A block is a digital container for storing encrypted information that joins with other blocks form a blockchain, a secure, unalterable, permanent record that keeps track of transactions or data. Each block contains details about recent transactions that haven’t been verified. Once these transactions are validated, the block is sealed, and a new one is created for each new transaction.  

Blue chip refers to a well-established, financially stable company that has a long track record of success and reliability. Blue chip companies are leaders in their industries, often paying consistent dividends. Examples include 3M, Apple, Berkshire Hathaway, Coca-Cola, JPMorgan Chase, Microsoft, and Johnson & Johnson.

A bear market occurs when a share market experiences a sustained period of share price declines, typically around two months or more. Like a financial winter, everything seems to cool down. Bear markets are cyclical - lasting a few weeks to a couple of months; or long-term - stretching for years or even decades. It's characterised by:

• Negative investor sentiment: fear and uncertainty prevail
• Economic downturns: a slow economy or a recession may cause stock prices to fall

Bear and bull market cycles are a normal part of share markets.

Basis points (bps) are a common way in finance to express small percentages. One basis point equals 0.01%, so 100 basis points equal 1%. It’s a handy unit for discussing changes in interest rates, fees, or investment returns. For example, if a bond yield increases by 50 bps, it went up by 0.50%. Investors and analysts use basis points to communicate and analyse even the smallest percentage changes in financial metrics.