What actually happens when you buy a share?
Your order is matched against a seller somewhere in a market you never see, and the ownership record changes days later — a chain of steps that explains several things investors find puzzling.
The sequence:
Your platform receives the order and routes it, typically to an exchange or to a market maker who quotes a price at which they will buy or sell.
Matching. On an exchange, an order book lists buy orders (bids) and sell orders (offers) by price. A market order takes the best available price; a limit order waits until someone meets your price. You are not buying from the company — you are buying from another investor, and the company receives nothing.
Execution, confirming price and quantity.
Clearing, where a central counterparty steps between buyer and seller so neither depends on the other's solvency.
Settlement, when cash and ownership actually exchange — commonly two business days later, and moving to shorter cycles in several markets. This is why sale proceeds are not instantly withdrawable.
Registration, updating the ownership record.
The spread is the real cost most people miss. The buying price is always slightly above the selling price, and that gap is a cost paid immediately on entry. It is wider for smaller, less traded companies — sometimes far wider than any commission.
Who actually holds your shares. Almost always a nominee: your platform holds them in a pooled account in its own nominee company's name, with its records showing your entitlement. This is why platform bookkeeping matters, why shares are ring-fenced from the platform's own assets if it fails, and why shareholder voting and company communications frequently do not reach you unless you ask.
Why prices move between clicking and executing. The quoted price is indicative; in fast markets execution can differ, which is slippage — and limit orders are the defence against it.
Fractional shares are held differently again, as a beneficial interest in part of a share, with different voting and transfer consequences.
General information, not investment advice.