Stock market securities
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The concept of the stock market and all its base components
Under the concept of the stock market means the combination of mechanisms and actions that are intended to trade in securities (such as stocks, bonds, etc.). The stock market is an integral part of the capital market. The stock market is often confused with the stock exchange. Meanwhile, the two concepts are different from each other. Stock Exchange - an organization that has as its aim the reduction of the buyers and sellers of securities in a specially the space provided.
Types of Stock Markets
There are various types of stock markets. Firstly, all stock markets are divided into primary (in which manufactured and placed first new securities) and secondary (in which there is a turnover of previously issued securities in the primary market). Secondary stock markets may also be divided into organized and unorganized.
Second, stock markets are also classified according to criteria such as territoriality (international, national, regional); type of transactions (cash, forward); Type of securities (stock market); timing (short, medium, long-term and perpetual securities); by issuers (government securities market, securities market companies) and others.
OTC stock markets
Stock markets are also divided on the stock exchange and OTC markets.
The participants of the exchange of the stock market are the stock exchanges, stock departments of the commodity and currency exchanges.
OTC stock market is characterized by the participation of investment funds, banks, brokerage firms, and other organizations engaged in securities transactions.
Characteristics of the stock market
In characterizing the stock market should take into account the fact that they are both segments of the capital market and money market. In a market economy, the stock market and stock exchange - is the main mechanisms for the redistribution of cash savings.
Stock Market Basics
Thus, on the basis of the stock market creates a free market mechanism and at the same time controlled flow of capital out of the least efficient sectors of managing in the most efficient.
Features of the stock market are determined depending on each country. They largely depend on economic and political situation in the country, its foreign policy, the degree of state intervention in the economy, the level of industrial development, etc.
The history of the stock market has its roots in the Middle Ages. Thus, medieval fairs and permanent promissory bill market XIII-XIV Art. It can be considered the first prototypes of the modern stock market.
Operation for the first time with the securities began to be carried out based in the XVI century. Lyon and Antwerp stock exchanges.
Formation of the stock market
However, the origin and formation of the stock market in its modern sense can only speak from the end of the XVI century. It was during this time increased issuing activity of states and began to appear the first joint-stock companies, such as those created in XVI - XVII Art. England in Moscow, the Levant, the Baltic, the East India Company and the Dutch East India combined company.
Securities and stock market
It should be noted that until the XIX century. joint-stock companies were not widespread. These securities accounted for a small part in the whole stock turnover, while the main operations carried out with securities in the stock markets was trading in government debt.
The Amsterdam Stock Exchange (1611) is the oldest stock exchange, preserved to this day. It is in this exchange were such methods of trading securities, as the term, margin transactions, and reportnye deportnye operations, etc..
It has undergone a certain evolution and machinery trade in securities on stock exchanges. First, it was the same as stock and commodities trading technique, but special rules of conduct have been developed over time. Especially hard, according to contemporaries, it had in 1621 with the publication of the decree prohibiting profanity and insults. Apparently, trade without "a three-story mat" at the time was difficult.
The most noteworthy NYSE. In the second half of XIX- beginning of the XX century. she played a significant role in the development of key elements of the investment vehicles. This exchange was created by renowned financial empire, continue to exist to this day (for example, Rockefeller).
The functions and role of the stock market
What are the main functions of the stock market? First, the stock market provides a process of reproduction of capital. Second, thanks to the sale of securities in the stock market are mobilized and concentrated capital and free cash accumulation. Third, the purchase of government securities and securities business organizations is their investment. And finally, thanks to the stock market shares is provided by a high level of liquidity of investments in securities.
Thus, the role of the stock market in the economy is a significant development.
Blue chip stock market
At the end of the article I would like to mention such a thing as "blue chips" of the stock market. "Blue chips" - it shares only the key companies in a particular country, which are the most liquid instruments. Buying and selling "blue chips" can be performed in any trading day. For Russia, such as "blue chips" are shares of such companies as "Lukoil", "Sberbank", "Gazprom", etc.
How is the stock market?
Stock Market - a regulated market of the capital, providing securities trading, both with access to trade in a particular market, and traded in the OTC space, ie, on the OTC market.
The system of the stock market is an abstract concept that refers to a set of actions and mechanisms that make it possible to trade securities (stocks, bonds, derivatives).
The theory of the stock market
In theory, the stock market is the main purpose of risk factors that allows to accumulate temporarily free finances and guide them on the improvement of the most promising sectors of the economy, but also make transfers between participants of ownership. The persons and organizations that own these temporarily available surplus and interested in their further augmenting acquire for this purpose, and the securities are called investors. At the same time companies that are interested in attracting additional funds for the development of domestic production, or the implementation of other plans to attract investment through the issue of securities by issuers inazyvayutsya.
The structure of the stock market
Any stock market is a very difficult financial and economic system, but the structure of the stock market can be divided into components: market participants (issuers and investors), the market itself (exchange or OTC), gos.nadzora authorities (Federal Financial Markets Service, the Central Bank, Ministry of Finance), self-regulatory organizations. If more or less clear to market participants and the market itself, then on the regulation and supervision of markets, it is worth mentioning separately.
Managing the stock market
Managing the stock market or stock activity - is aimed at regulation of it its direct participants and transactions performed between them. The market can be governed by both external and internal image. Internal control - a direct subordination of the work of its own market regulations, such as, for example, the Constitution and Rules. Outside the regulation - is the subordination of the activities of the market state regulations and acts of third parties, such as the Federal Financial Markets Service and the Central Bank.
Banks in the stock market
Speaking about the role of the Central Bank and other banks in the stock market, it is worth noting that, in view of the law "On banks and banking activity" as the investors in the market and may make banks. Also, the bank can take part in the primary issue of securities carried out by the client, ie, Bank may act guaranteeing partner not only in relation to the seller of securities, but also in relation to the buyer.
Depending on the nature of the banks' participation in the mediation operations there are 3 types of stock market models: non-banking model (such as the US, where the mediators may be non-bank companies), the banking model (Germany, where intermediaries are the banks) and the mixed model (Japan, in which intermediaries serve both banks and non-banks).
The organization and infrastructure of the stock market
In terms of the internal organization of the stock market is a harmonious combination of the following elements of the market infrastructure:
- Legal (normative and legislative acts);
- Information (business press, stock indices, stock indicators, etc...);
- Registration network;
- Depository Clearing and settlement network (public and private securities, there are often separate depository clearing system).
Stock Market Tools
Next, I would like to talk about the stock market instruments. Now most of the market turnover make transactions with stocks and bonds, as well as so-called derivatives - Derivatives. In other words, in some cases, transactions with available commodity, in other - deal with the future delivery of the goods. Market, to make transactions of the first type, called a spot. Where goods are sold for cash and have an immediate delivery time. The deals also with the future supply of goods used derivatives, which include futures, options, forwards, swaps and deposit receipts. They all provide delivery / receipt of goods at a certain date in the future or allow the participant does not deliver the goods. All this variety of tools enables participants to apply and combine many trading systems and strategies in the stock market, seeking thereby to reduce the risk and increase profits during the sale and purchase transactions.
Secondary stock market
Finally mention must be made of the concepts of primary and secondary stock market and their role in the transfer of property rights between the parties. Placement of securities by the issuer (always under the supervision of the Federal Financial Markets Service) among the first owners (usually large investment companies) is the primary stock market. In this case, the issuer acquires investment resources necessary for it to continue the work. Further movement of the ownership of securities is carried out by means of the secondary stock market. At the same time between investors and brokers on the one hand, and the primary buyers of the other side are the transactions of purchase / sale at the market price, thereby ensuring the liquidity of the stock market as a whole.
State of the stock market
What words can describe the current state of the stock market? The most significant - is the extreme dependence of the domestic stock market from the primary sector of the economy. As a consequence, the major stock market indicators extremely sensitive to the slightest changes in prices of raw media, and this reaction is manifested across the spectrum of the stock market. This is the first time.
The second point relates to the sharp increase in speculative pressure, which is observed in recent years in many domestic markets. With what it can be connected? Most likely, the fact that the depreciation of the exchange services, as well as the unstable economic situation has led to the fact that the stock markets of the country began to come a large number of small investors, driven by a thirst for speculative profit.
The global economic crisis
It broke out in mid-2008 Finance crisis inevitably led to the development of the crisis and the Russian stock market. As a result, recently it seemed absolutely reliable company commodity and banking sectors lost dramatically in value of equity assets, pulling him and the rest of the market. And then, as a consequence, it began a long period of falling stock market to suspend until the end of 2009.
Problems and fall of the stock market
This situation resulted in the emergence of a range of problems on the stock market. At the moment, the following aspects can be distinguished, obviously affecting the prospects for further development of the Russian stock market and therefore require immediate resolution:
1. The decisive overcoming of negative external factors, ie, the financial and economic crisis and the economic, political and social tensions.
2. Qualitative improvement of legislation in the field of financial markets and the control of its implementation.
3. The direction of the free cash flows and major stakes in the state. enterprises in the reconstruction and development of production in the country.
4. Strengthening the role of the state in the stock market: it is necessary to reduce the bureaucratic barriers in the area of capital markets, to establish strict regulatory infrastructure of the market, to ensure transparency in the securities market, etc.
The stock market in 2010
The implementation of these programs will allow the domestic stock market in 2010, not only to overcome the consequences of the first wave of the financial crisis, but also to lay the foundations for the successful development of the financial system in the long term. However, the current situation in the market is still very volatile and unpredictable almost seem incredible that the jumps of the stock market, both in one and in the other direction will continue. If the world, this process can be put in any kind of framework likely that the Russian and Ukrainian markets, and particularly the situation in the stock market resembles a crazy roller coaster. A couple of months ago, hardly anyone in their right mind would even suggest that the market may fluctuate by 18% (Russia) -40% (Ukraine) in such a short period. The Ukrainian stock market in general, showing an incredible growth in 2009, in 2010 surprised even more rapid decline.
Action - is a security which gives the holder the right to receive part of the company's profits in the form of dividends and a portion of the company's assets. Some shares also entitle the shareholder to participate in the management of the company…