Structure of the modern securities market. Concept and types of securities markets Securities market structure and participants
The structure of the securities market largely consists of the following elements:
Direct market participants;
- the market itself;
- various bodies that regulate market activities and general control;
- self-regulatory organizations. They are associations formed by professional participants, such as dealers, brokers, managers and others;
- infrastructure - legal, information, clearing, depository, registration.
Structure of the securities market implies that, depending on the methods of trading, the market can be divided into different types:
1. Primary and secondary. Certain securities appear on the primary market for the first time. For the first time, an investor purchases this security from the issuer, and the transaction can be carried out either with the help of intermediaries or without them. Previously issued securities are freely bought and sold on the secondary market.
2. Organized and free (unorganized). In an organized market, trading takes place according to established rules and standards. That is, securities undergo mandatory registration, and all transactions with them are recorded. Most often, trade is carried out between professional intermediaries who have special licenses for their activities. In an unorganized market, trading occurs spontaneously, without observing any rules. Transactions are made directly between the buyer and seller and are not recorded anywhere.
3. Exchange and over-the-counter. As the name suggests, an exchange market means that all transactions take place on the exchange. This market will always be organized. Trading is conducted in accordance with the rules, the main participants are professional intermediaries. In the over-the-counter market, trading is carried out without passing through all exchanges. Typically, transactions involving the purchase and sale of new securities, as well as those that for some reason were not admitted to trading on exchanges, take place here. The over-the-counter market can be either organized or unorganized.
4. Cash and urgent. In the cash market, transactions are usually executed immediately, within a couple of business days. In the derivatives market, transactions are concluded in such a way that certain deadlines are established that exceed a period of two days.
5. Traditional and computerized. In a computerized market, trading occurs through computer networks that unite all intermediaries into a single market. With computerized trading, it is absolutely not necessary for sellers and buyers to meet in person to complete a particular transaction. After completing an application for the purchase (sale) of securities, it is processed and automatically entered into the general trading process.
Also, all stock markets may differ in other ways:
- by location they can be international, national and regional;
- according to the types of securities traded on the market, stock markets, bond markets and others are distinguished;
- by the volume of valuables that are freely circulated on the market;
- by industry affiliation of securities;
- on other grounds.
The main purpose of any securities market is to assist sellers and buyers in carrying out relevant transactions. The market provides communication between counterparties, and also provides legal and information support.
Securities market
general characteristics
The concept of the securities market. Stocks and bods market - this is the totality of relations between its participants regarding the issue, circulation and cancellation of securities.
Let us reveal the essence of the concepts used in defining the securities market.
Security is a document certifying the rights of its owner.
The owner, or proprietor of securities, i.e. the person acquiring securities by right of ownership, is investor .
The investor is one of the participants in the securities market. The other main market participant is issuer - this is the person who issues securities on the market and who bears obligations on them to investors.
The issuer and investors enter into a relationship already at the first stage of the circulation of securities - when they are released into circulation. At this stage, the issuer alienates the securities to the first investors. In the opposite direction, from investors to the issuer, funds or other property move. At the second stage of the circulation of securities - circulation - securities are transferred from one investor to another. And at the third stage - redemption - investors, as in the first stage, again enter into a relationship with the issuer that issued the securities, but only now the securities flow from investors to issuers, and the latter, by redeeming the securities, pay investors money. (The monetary form of payment of funds when redeeming securities is traditional, although issuers may provide when issuing securities: the cancellation of securities will be accompanied not by the payment of funds, but by the issuance of some property or the provision of a service.) The peculiarity of the stage of cancellation of securities is that that the securities cease to exist and are destroyed. But it must be borne in mind that not every transfer of a security from an investor to an issuer is accompanied by the cancellation of the security: it may become the property of the issuer for some time, after which the security returns to circulation again. This happens, for example, when repurchasing securities. In accordance with Russian legislation, a joint stock company can buy back shares issued (issued) by it if such a decision is made by the general meeting of shareholders or the board of directors of the company, and at the same time, a limitation is imposed on the period during which the shares can be at the disposal of the company - no more than one year. There are cases (they are provided for by law) when a joint stock company does not have the right, but is obliged to buy back the shares they own from shareholders. The issuer may also redeem bonds at its own discretion or at the request of bondholders (in the latter case, if the issuer has provided for such a right for investors).
Thus, the issue, circulation and cancellation of securities are stages of the circulation of securities, stages of their life cycle. And at each stage of the circulation there is an alienation, or otherwise a transfer, of securities from one market participant to another. The alienation of securities can occur both by market methods (as a result of purchase and sale, exchange) and non-market methods (as a result of inheritance, donation or confiscation).
Life cycle stages may differ by type of security. Thus, for shares, the first two stages of the circulation are required - issue and circulation, and the third stage may not occur at all, since a share, in general, is an irredeemable security, its period of existence is determined by the period of activity of the issuer - the joint-stock company, and while it exists joint-stock company, it can be repaid only in certain cases (during the reorganization of the joint-stock company, in connection with a decrease in the size of the company’s authorized capital, etc.). At the same time, in the life cycle of any type of debt securities, redemption always takes place, since they are issued for a specific period; when it ends, the securities are redeemed. But at the same time, there may be no circulation stage if the issuer, when issuing securities, established a ban on their circulation, and thereby established that the securities are non-marketable.
Types of securities markets. Securities markets can be classified according to various criteria, and then each type of securities market will reveal a certain side of it.
There are different types of securities markets:
by stages of securities circulation:
Primary - covers the first stage of the circulation of securities - issue; securities are placed on this market and find their investors for the first time; issuers and investors are mandatory participants in the primary market. It is in the primary market that issuers raise the funds they need to realize the goals they set when planning the issue of securities;
Secondary - involves the second stage of the circulation of securities - circulation; usually the only participants in this market are investors; between them, securities and cash (or other property) are transferred in different directions. Since operations on the secondary securities market take place without the participation of the issuer and they do not have a direct impact on the state of affairs of the issuer, the issuer, by and large, does not care who owns the securities issued by it, the main thing for it is the volume of obligations on them and its ability to fulfill. The secondary securities market is of particular importance for investors: it is in this market that market prices are formed, securities acquire liquidity and profitability, and, depending on their level, investors can realize their investment goal - to make a profit.
As for the third stage of the circulation of securities - cancellation, it so happens that there is no separate type of securities market that characterizes the withdrawal of securities from circulation and their destruction, and the relationships that develop between market participants, investors and issuers at this stage, usually referred to as the secondary securities market.
by issuer:
The market for state and municipal securities is a market for securities whose issuers are executive bodies of state power and local administrations;
Corporate securities market - issuers of securities classified in this market are legal entities (more details about issuers are discussed in Chapter 1.5).
by scale:
National is the securities market of a single country (state);
Global is a combination of national markets and an international (international) market for a certain type of securities, for example the Eurobond market.
depending on the place of trade:
Exchange - the place for trading securities is the exchange; a feature of the exchange market is a high degree of concentration of transactions in one place per unit of time; the highest quality securities are traded on the exchange market, since in order to be admitted to exchange trading, and especially with the listing procedure, their issuer must fulfill a number of requirements;
OTC is a market in which securities are traded outside of an exchange; This market is characterized by the chaotic nature (dispersion) of transactions across time and space.
according to the degree of regulation (the presence of firmly established trading rules):
An organized one is a market that functions strictly according to established rules that are uniform for all market participants; an exchange market is always an organized market, since the time and procedure for trading on the exchange, the procedure for admitting securities to exchange trading, the procedure for admitting market participants to trading, etc. are regulated;
An unorganized market (this market is also called “street”, “spontaneous”) is a market whose operating rules are either not prescribed by the state at all and then the participants in transactions negotiate independently on all issues, or, if the rules are established by the state, then they are much more liberal than for the stock market; According to Russian legislation, the over-the-counter market can be either organized or unorganized.
according to the method of transactions concluded:
Traditional (in other words, presence or voice) - involves the presence of trading participants in a certain place, and trading in such a market is carried out by voice;
Computerized - communication between trading participants is carried out in the market via computers via electronic and telecommunication networks, their computerized trading places are located directly in the company’s offices; Today the securities market in almost all countries is computerized.
by type of securities transactions concluded(on this basis, three groups of securities markets are distinguished) :
Depending on the execution time of concluded transactions:
Cash (or otherwise “spot” market, spot market, or “cash” market) - in this market, immediate execution of transactions is assumed (in the exchange market this type of transaction is called “delivery versus payment”), that is, on the day of its conclusion (T+ 0, where T is the day the transaction was concluded); A deferred payment is allowed for a cash transaction, but not more than three days (T+3);
A derivatives market is a market in which transactions are executed no earlier than three days after they are concluded, usually one or several months later; the derivatives market is considered a derivatives market;
Depending on the purposes of investing in securities:
Investment (direct investment market) is a market with investments of funds for a long period of time, with the goal, as a rule, of gaining access to managing the activities of the issuer (when investing in shares);
Speculative - an investor, investing his funds in securities, pursues one goal - to receive income from the growth (decrease) of the market value in a relatively short period of time (or, as speculative investors say, “to take a scalp from the market”);
Depending on the means by which the transaction is made:
Cash is a market in which transactions are made at the expense of the participant’s own funds;
Debt - in this market, participants enter into transactions using borrowed funds; Transactions on the debt market include: margin transactions, carried out partially using funds loaned to the client by the broker; repo transactions.
by type (group of separate types) of securities:
Stock market;
Bond market;
Bill market;
Investment market;
Market for mortgage-backed securities (includes the market for mortgage-backed bonds and mortgage participation certificates), etc.
The securities market, despite its unity, can be divided into several segments, which are also called markets. They are characterized by specific conditions, trading participants, and securities traded on them.
The securities market is divided into two types:
1) primary;
2) secondary.
To put it in the most general terms, "primary market" is a term used to describe those times when securities first appear in the public arena, usually in exchange for cash.
The secondary market is a term used to describe when second and subsequent tranches of outstanding securities appear in the public arena; it is also the market in which securities that have previously entered the market are traded.
Legislatively primary securities market is defined as the relationship that develops during the issue (for investment securities) or during the conclusion of civil transactions between persons accepting obligations under other securities and the first investors, professional participants in the securities market, as well as their representatives.
Thus, the primary market is the market for the first and repeated issues of securities, where their initial placement among investors is carried out.
On the primary securities market, all types of existing securities are sold: shares and bonds of enterprises, short-term government securities, government foreign currency loan bonds, financial instruments (various certificates issued by banks, bills). Sales in the primary market are carried out through stock stores, as well as the existing system of intermediaries: brokers and commercial banks.
The most important feature of the primary market is full disclosure of information to investors, allowing them to make an informed choice of security for investment. All activities in the primary market serve to disclose information:
Preparation of the issue prospectus, its registration and control by state authorities from the standpoint of completeness of the presented data;
Publication of prospectus and subscription results, etc.
A feature of domestic practice is that the primary securities market still prevails. This trend is explained by such processes as privatization, the creation of new joint-stock companies, financing of public debt through the issuance of securities, re-registration of state foreign currency debt through the stock market, etc.
The primary market includes:
Stock market;
Bond market.
There are two forms of the primary securities market:
Private placement;
Public offer.
Private placement characterized by the sale (exchange) of securities to a limited number of previously known investors without a public offer and sale.
Public offer - this is the placement of securities during their primary issue through public announcement and sale to an unlimited number of investors.
The balance between public offerings and private placements is constantly changing and depends on the type of financing that businesses in a particular economy choose, the structural changes that the government makes, and other factors.
It is very important to note that the primary market is the market for new issues and the method that most borrowers use to raise new resources. For this market to operate successfully, it is vital that savers and investors have confidence that they are putting their money into this market for good reason. A weak primary market will undermine liquidity in the secondary market. Therefore, there is a need to provide accurate information so that investors can make comparisons with other forms of investment and decide whether to invest in each new issue. In other words, a good primary market must be selective in order to judge value.
On the other hand, the issuer needs a good primary market in order to ensure that the offer for the purchase of securities reaches the largest possible audience of potential investors, which should allow it to obtain the most favorable price for the securities offered.
There are several methods for listing securities on an organized primary market. These include:
1) direct invitation by the company. The Company invites the public to subscribe for its securities at a fixed price through the publication of a prospectus; all necessary formalities and underwriting (guarantee of issue) are carried out by the issuing company (usually an investment bank/securities company);
2) offer for sale. This method can be used in a situation where one of the original or existing shareholders wants to offer their shares to the public. The company may organize a syndicate of banks and brokerage firms that purchase the entire issue for distribution to their clients. Old shareholders may have the first right to purchase shares offered;
3) tender offer. The investor is invited to participate in a competition to purchase shares at the minimum price. After the filing deadline, the company's financial advisers calculate an exercise price that will allow the issuing company to raise the maximum amount of funding required; the exercise price may be lower if the company is targeting a particularly wide range of shareholders (a large number of shareholders holding a small number of shares each) . As a result of competitive bids, a company may acquire much more equity than if it had allowed speculative investors to profit from the first-day bidding premium, which could happen if the issue was underpriced. If someone acts as an underwriter for an issue, then it (the issue) will be sold at the minimum tender price;
4) private placement. A method in which an investment bank subscribes to shares on offer after identifying a small group of clients to whom it will then resell the shares. Or the investment bank may be used as an agent and be responsible for finding final investors for the issuing company. This method is often cheaper for the company than a public offering, since even though the price may be slightly lower for clients (in order to make the investment more attractive and compensate for its potential illiquidity), it will still be less than the cost of underwriting, which in this case is not necessary.
However, it should be noted that securities regulators generally insist on protecting the interests of investors, which is determined by the requirement for a minimum number of shareholders and a certain percentage of shares that must be sold to the public (usually 25%). The latter requirement is typically met through the use of a second investment bank or brokerage firm that distributes the shares. Using a method such as hosting can not only be a cheaper method for small releases, but also the fastest. There is also a higher probability of a successful issue, especially when there are already companies queuing up for subscription or sale, which can absorb all available funds;
5) reverse takeover through conditional issue of securities. A method by which a private company can achieve listing in a situation where a public company offers its shares in exchange for the opportunity to purchase the assets of the private company; if a controlling stake is transferred to a private company, then it can in fact be considered to have privileges in terms of raising funds, since it has received a listing;
6) admission of shares to quotation on the stock exchange. Using this method there is no need to issue new securities, but the company's share capital must be sufficiently paid up in order to gain access to listing or quotation on the stock exchange. It should be understood that with this form of offer the company does not raise any new funds. A company must provide an admission document, but generally is not required to provide a prospectus unless the company plans to issue additional shares or raise funds following admission.
While one of the primary challenges facing the securities market is to provide an efficient mechanism for raising capital for economic growth, it is equally important to provide opportunities to earn a return on the risk taken by those who provide the capital.
Under secondary stock market refers to the relationships that arise during the circulation of securities previously issued on the primary market. The basis of the secondary market is made up of transactions formalizing the redistribution of spheres of influence of investments of foreign investors, as well as certain speculative transactions.
The most important feature of the secondary market is its liquidity, i.e. the possibility of successful and extensive trading, the ability to absorb significant volumes of securities in a short time, with small fluctuations in rates and at low sales costs.
The secondary securities market is divided into an organized (exchange) market and an unorganized (over-the-counter or “street”) market.
Classification of the securities market by trading organization includes:
Exchange market;
Over-the-counter (retail) market;
Electronic market.
According to the types of securities traded, in particular, on the Russian market today, the following are distinguished:
1) government securities market;
2) the stock market, in which, in turn, there are three main segments (sometimes called echelons): “blue chips” (the most liquid shares of the largest Russian companies), shares of the “second echelon”, which are approaching them, but have not yet achieved the appropriate liquidity , and shares of enterprises that practically do not appear on the market;
3) the local securities market (mostly municipal bonds or bonds of a constituent entity of the federation);
4) markets for bills of exchange from different issuers;
5) derivatives markets (mainly futures).
The most developed is the exchange market. It is characterized by high turnover, which makes it possible to create a highly efficient infrastructure that can take on most of the risks and significantly speed up transactions and reduce unit overhead costs. The price for this is strict standardization of the transaction, strict restrictions on the activities of market participants, and increased obligations regarding maintaining liquidity and reliability.
Organized market (exchange) is an auction type market. It is characterized by public, transparent bidding, open competition between buyer and seller, with a mechanism for drawing up bids and offers for sale, which can serve as the basis for concluding transactions. This is the circulation of securities on the basis of firm, stable rules between licensed professional intermediaries - market participants on behalf of other market participants.
The stock market is the trading of securities on the stock exchange. This is always an organized securities market, trading on it is carried out strictly according to the rules of the exchange and only between exchange intermediaries, who are selected among all other participants.
An organized or exchange market is exhausted by the concept of a stock exchange as a special, institutionally organized market on which securities of the highest quality are traded and transactions on which are carried out by professional participants in the securities market.
Unorganized market (free, retail, over-the-counter) This is the circulation of securities without observing rules that are uniform for all market participants. Trade takes place spontaneously, in contact between the seller and the buyer. Information about completed transactions is not recorded.
In cases where transactions are small, it is still unprofitable to execute them through large specialized trading systems. This is due to purely economic parameters. In this case, the buyer goes directly to the dealer and buys the paper directly from him. As an example, we can point to many of our banks that sell savings loan bonds to the public. This is a special segment of the securities market, differing from the exchange market in many respects. It is called the retail (over-the-counter) market (OTS - market from the English Over the Counter - trading from behind the counter).
Let us note that sometimes on the over-the-counter market, on the contrary, very large transactions are made, for example, the purchase and sale of a controlling stake. In general, this is a market for individual, non-standardized transactions.
The over-the-counter market is the trading of securities bypassing the stock exchange, the sphere of circulation of securities that are not admitted to quotation on stock exchanges. New issues of securities are also placed on the over-the-counter market. The over-the-counter market is organized by dealers, who may or may not be members of the stock exchange.
An organized market requires that shares and bonds offered for sale undergo special registration and satisfy a set of additional conditions that provide maximum business information about the business for whose financial support these particular securities are issued. Their purchase and sale is carried out through an application on the stock exchange, and all related procedural issues are strictly regulated by the rules of this exchange and state legislation.
The free market in this sense does not impose strict requirements on sellers and buyers. There are legislative norms that provide complete control over business activities. To the same extent as in the organized market, companies issuing securities bear administrative and criminal liability for deceiving or misleading the buyer. Intermediaries act in accordance with official rules and regulations for customer service, and the purchase and sale of securities itself is subject to legal registration and is of an absolutely legal nature.
An organized securities market – a system of stock exchanges – has the following essential features:
1) transactions are made frequently;
2) there is almost never a large gap between the demand price and the supply price;
3) transactions are carried out in a short time; as a rule, there are no significant price fluctuations.
All this is ensured by a set of targeted organizational actions.
It is necessary that the circle of holders of securities of each company be as wide as possible. In addition, short-term buying and selling transactions should be encouraged in every possible way. Another important factor is the presence of a large number of large companies, but medium and small companies must be represented in the organized market.
It should also be noted that the organized market has the ability to self-accelerate and self-slow down. An active market creates the impression of easy liquidity of securities, which stimulates their purchase. In addition, it attracts with a variety of opportunities, which increases the number of transactions on a credit basis.
A free securities market can be characterized as a market that does not have a specific location, transactions in which are carried out outside the exchange. Another name - telephone market - indicates the main method of carrying out transactions.
The free market represents a second, no less important area for the distribution and circulation of investment resources. In some types of securities it is inferior, but in others it is significantly superior to the exchange system. This applies primarily to government and municipal bonds, shares of many banks, insurance and investment companies. Along with them, a huge number of issues usually circulate on the free market, which, for various reasons, cannot be traded on the stock exchange.
These include the following:
Issues aimed at a limited circle of potential buyers, requiring special distribution methods;
Small releases;
Papers with a very high price;
Securities in which supply matches demand, i.e. the buyer is widely known and it is easy to distribute the papers;
Securities issued on the security of real estate;
Papers closely related to regional economic complexes or social and production infrastructure;
Paperless form of issue when the issuer does not want to advertise himself.
Also on the free market, transactions are made with shares of large companies circulating in the exchange system.
The main participants in the free market are broker-dealer offices, which are characterized by a relatively narrow specialization in types of securities and transactions, as well as banks and investment companies. In turn, banks are divided into investment banks, whose main activity is the subscription to the distribution of shares and bonds of various corporations, and commercial banks, which are mainly engaged in the sale of federal and local bonds on the free market. A significant number of transactions in the free market are carried out not on a commission basis, but on a net (or dealer) basis. This means that services are provided to clients for the sake of income from the difference in prices - from the subsequent resale of securities by the dealer at a higher price or from their purchase for clients at a lower price.
The free market is always not only under state control, but also under the control of the association that unites these market entities. In all developed capitalist countries, participants in the free market, like participants in stock exchanges, are subject not only to legal, but also to professional and qualification control.
Commission fees in a free market are not regulated by general rules. In fact, commissions range from minimum values on the organized market to 5% (and sometimes higher) of the transaction amount on the free market.
The secondary market consists of two parts. One of these parts can be described as a market for "used" securities. The second part consists of additional issues of securities already outstanding, regardless of whether the issue results in raising new funds or not.
The following are the methods used to obtain listing for new issues of existing securities that are already listed:
1) listing through execution or conversion. New securities or new issues of already listed securities may be listed through the exercise of an option on new shares (employee or executive bonus schemes) or through the conversion of a listed security into another form of security, or through the subscription of warrants for conversion into another form valuable papers;
2) release of rights. The company wants to raise additional funds through the issue and listing of a new issue of ordinary shares, subject to preferential terms, at a fixed price (usually slightly below the current market price). If one of the shareholders does not want to purchase these rights, they can be sold outside the company, and the premium, i.e. the amount in excess of the issue price, will be credited to the account of the refusing shareholder;
3) open offer. The offer is submitted to shareholders, inviting them to subscribe to purchase additional shares at a fixed price, but (unlike a rights issue) the number of shares purchased will not necessarily depend on the number of shares the shareholder already owns. This process results in a higher price because shareholders willing to pay more will receive more shares. From a regulatory perspective, there is a trade-off between the principle of preemption and the fact that the company raises additional funds;
4) bonus or capitalization issues. Shares are created by capitalizing reserves and distributed free of charge to existing shareholders in proportion to the number of shares they already own.
Securities can be traded on traditional and computerized (electronic) markets.
In the electronic market, trading is carried out through computer networks that unite the relevant stock intermediaries into a single computer market, which is characterized by:
Lack of a physical place where sellers and buyers meet;
Full automation of the trading process to enter your orders for the purchase and sale of securities into the trading system.
Electronic securities markets arose later than stock exchanges - with the advent of modern communications and computer science. Currently, their turnover is comparable to that of the stock exchange. There were several systems of this kind in Russia, but today only the Russian trading system actually works.
Trading in it is carried out by professional brokers and dealers, united in the associations PAUFOR (Professional Association of Russian Stock Market Participants) and NAUFOR (National Association of Russian Stock Market Participants). In these trading systems, blue chip shares (RTS) and second-tier shares (RTS-2) are traded. The difference from exchange trading lies mainly in the mechanism for executing transactions: having established quotes in the electronic system for the security he is interested in, the market taker trader contacts directly the market maker who issued the quote and enters into a standardized transaction.
Derivatives markets. It is worth special mentioning the role of the organizer of trading in derivatives markets. Since a futures represents a mutual obligation to buy (respectively sell) the underlying security at a certain time and at a pre-agreed price, the role of the trade organizer is primarily to ensure the fulfillment of this obligation. This is achieved by making a special collateral - margin - by both parties to the transaction. In the event that one party fails to fulfill its obligations, the margin is used to compensate the other party for the loss.
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Structure of the securities market
| Parameter name | Meaning |
| Article topic: | Structure of the securities market |
| Rubric (thematic category) | Trade |
The securities market, like any other market, is a complex structure with many characteristics. Taking into account the dependence on this, it can be considered from different sides, and its different characteristics in pairs reflect one or another side of the securities market. The components of the securities market are based not only on one or another type of security, but also on the method of trading on this market in the broad sense of the word. From these positions in the securities market, it is extremely important to distinguish markets ( rice. 17 presentations .):
‣‣‣ primary and secondary;
‣‣‣ organized and unorganized;
‣‣‣ exchange and over-the-counter;
‣‣‣ traditional and computerized;
‣‣‣ cash and urgent.
Taking into account the dependence on the stage of circulation of a security, primary and secondary markets are distinguished. The primary market is the market in which the initial offering of a security occurs. The function of this market is to mobilize new capital.
.Secondary market - it is the market in which previously issued securities are traded. In this market, resources are redistributed among subsequent investors.
Considering the dependence on the level of regulation, securities markets can be organized And unorganized. In the first, the circulation of securities occurs according to firmly established rules that regulate almost all aspects of market activity; in the second, the participants in the transaction independently agree on all issues.
Taking into account the dependence of the place of trading, exchange and over-the-counter securities markets are distinguished. Exchange market means that securities are traded on stock exchanges, but most types of securities are traded outside of exchanges. If the exchange market is essentially always an organized market, then over-the-counter market should be both organized and unorganized ("street", "spontaneous"). Today, in countries with developed market economies, only the organized securities market, which is represented either by stock exchanges or over-the-counter electronic trading systems, is of overwhelming importance.
Considering the dependence on the type of trading, the securities market exists in two main forms: traditional and computerized.
Traditional market- This is a traditional form of securities trading in which sellers and buyers of securities (usually represented by stock intermediaries) meet directly at a certain place and public, transparent trading takes place (as in the case of stock trading) or closed trading, negotiations are conducted, which - the reasons are not subject to wide publicity.
Computerized market- These are various forms of securities trading based on the use of computer networks and modern communications. It is worth saying that they are characteristic of him.
a) lack of a physical meeting place for sellers and buyers; computer trading places are located directly in the offices of companies trading securities, or directly their sellers and buyers;
b) the non-public nature of the pricing process, automation of the securities trading process;
c) continuity in time and space of the securities trading process.
Taking into account the dependence of the periods on which transactions with securities are concluded, the securities markets are divided into cash and futures. Cash market (spot market, cash market) is a market for immediate execution of concluded transactions, while purely technically, their execution can take up to one to three days if delivery of the security itself in physical form is required.
Futures securities market is a market with delayed, usually several months, execution of a transaction. As a rule, traditional securities (stocks, bonds) are traded on the cash market, and contracts for derivative instruments of the securities market are traded on the derivatives market.
Structure of the securities market - concept and types. Classification and features of the category "Securities Market Structure" 2017, 2018.
The infrastructure of the securities market is a complex system of institutions that ensure the smooth functioning of the securities market by creating the necessary conditions for the activities of its participants. The infrastructure of the securities market includes the following links: 1.... .
The securities market has its own structure, which consists of the following components: 1. market subjects - market participants; 2. market objects – securities; 3. the market itself – operations on the market; 4. system of regulation and control of the securities market; 5.... .
Question 2. Fundamental concepts of the securities market Securities are a complex, diverse and contradictory economic phenomenon. Some of them appeared a very long time ago, in the 12-13th centuries, such as bills of exchange, while others appeared more recently: deposit and savings certificates... .
Manipulation of the securities market as a whole is the impact on the exchange rate (calculated) price of assets traded on the stock market through short-term or long-term transactions of large volume. Corner transactions - transactions with securities,...
1. Structure of the securities market
Russia's transition from a strictly centralized planned economy to a market economy regulated by the state requires the reconstruction of the financial market in the country with all the institutions that serve it. This task is complex and large-scale. For many decades in Russia, essentially, there was neither a financial market nor its infrastructure: private commercial and investment banks, stock exchanges, insurance companies, etc.
A market economy requires the use of the potential capabilities of the financial market, which represents the most important source of its growth. The financial market is the totality of all monetary resources that are in constant motion, i.e. distribution and redistribution, under the influence of the changing ratio of supply and demand for these resources from various economic entities. Its scale depends on the state and size of social production, and the size of the amateur population, first of all. The financial markets of the United States, European Community countries and Japan now have the greatest resources. The Russian financial market, when the transition period of its development ends, will also have sufficient resources for it.
The structure of the country's financial market consists of three interconnected and complementary markets.
1. Market of cash in circulation and short-term means of payment performing its functions(bills, checks, etc.) or money market.
2. Loan capital market - bank loans.
3. Securities market. The securities market expands and facilitates access for all economic entities to obtain the financial resources they need. The issue of shares allows you to receive financial resources free of charge and indefinitely, until the end of the enterprise’s existence; issuing bonds allows you to obtain a loan on more favorable terms compared to the conditions of monopoly banks.
2. The role and functions of the securities market in macroeconomics
The securities market differs from other types of markets primarily in the specificity of the product. A security is a special kind of commodity. It is both a property title and a debt obligation, a right to receive income and an obligation to pay income. A security is a product that, without having its own value (the value of a security as such is insignificant), can be sold at a high market price. The latter is explained by the fact that a security, having its nominal value, represents a certain amount of real capital invested, for example, in an industrial enterprise. If market demand for a security exceeds supply, then its price may exceed its face value (the opposite situation is also possible). Since the market price of a security can deviate significantly from its face value, it represents “fictitious capital” (K. Marx).
Fictitious capital is a paper double of real capital, representing industrial capital with all its isolated functional forms (trade, loan). The price of fictitious capital is determined by two circumstances: a) the ratio of supply and demand for capital; b) the amount of capitalized income on securities. It is directly proportional to the excess of demand for capital over its supply, as well as the amount of income from the security. At the same time, it is inversely proportional to the excess of the supply of capital over its demand and the level of bank interest rates in the country.
The price of fictitious capital is a market value category subject to frequent fluctuations. The discrepancy between real and fictitious capital and their possible movement in opposite directions is a characteristic feature of the securities market.
From what has been discussed it follows that the securities market “represents” a really existing capital market (money and other material assets).
In the USA, for example, there is a concept of “four markets” for securities: the “first market” is a stock exchange that carries out transactions with securities registered on it; “second market” - over-the-counter, where transactions are made with securities not registered on the exchange; “third market” is an over-the-counter market where transactions with securities registered on the stock exchange through intermediaries take place; The “fourth market” is aimed at institutional investors (works through a computerized system, without intermediaries). The last three markets provide over-the-counter turnover.
The development of the capital market is influenced by many processes of reproduction of individual and social capital, including cyclical fluctuations that determine the state of the situation in any type of commodity markets.
The main functions of the securities market are: investment function, i.e. formation and distribution of investment funds necessary for expanded reproduction and technical progress; redistribution of property through the use of packages of securities (primarily shares); risk redistribution(hedging) through the purchase and sale of fictitious capital, through “opposite” transactions, the participants of which take turns taking the risk; “pull” function of venture capital“, giving market participants the opportunity to risk their capital to obtain high profits; increasing debt liquidity(including government), covering it by issuing securities.
The securities market is a regulator of many spontaneous processes occurring in a market economy. These include the process of investing capital. The latter assumes that the migration of capital ensures its influx to places of necessary application, at the same time it leads to the outflow of capital from those sectors of production where there is a surplus.
The mechanism of migration is known: the demand for some goods (services) grows - their prices rise - profits from their production grow, into which free capital flows, leaving those branches of production whose demand for products is declining (the industry becomes less profitable). Securities are the means by which the capital migration mechanism works. They adsorb temporarily free capital, wherever it is, and through their purchase and sale they help “throw it” in the right direction.
In practice, this leads to the fact that in a market economy capital is allocated mainly in industries necessary for society. As a result, an optimal structure of social production arises: it begins to correspond to public demand. This is an important advantage of a developed market economy.
3. Professionals and securities market participants
The functioning of the securities market is impossible without professionals serving it and solving emerging problems. Their activities require the use of sophisticated computer technology, which ensures the process of pricing and dissemination of information. In modern conditions, special training is required for securities market professionals, including both general economic and technical training, and, taking into account the acute situations arising in the market, psychological. In the activities of securities market professionals, experience and intuition are also of great importance.
The main professionals of the securities market are: brokers (intermediaries in concluding transactions, not participating in them themselves); dealers(intermediaries participating in transactions with their capital); managers(persons managing securities transferred to them for trust management); clearings(organizations involved in determining mutual obligations); depositories(provide securities storage services); registrars (maintain securities registers); organizers of trading on the securities market(provide services facilitating the conclusion of transactions with securities) and jobbers(specialists in the securities market conditions). Along with these professionals, the securities market is served by bank employees, investment fund employees, and government officials and lawyers, who provide the necessary legislation and oversight for the financial market. In 1997, about 4 thousand licensed professional participants, mainly brokers, worked in the Russian securities market.
The emergence of the securities market is associated with the development of trading and usury operations. Both types of activities are the ancestors of the first securities - bills and bills of lading. Further development of the market is associated with the emergence of joint-stock companies and the issuing activities of the state.
Currently, participants in the securities market, working simultaneously as both issuers and traders, can be divided into the following main categories:
1. Main participants of the securities market— state, municipalities, largest national and international companies. These participants have a high image, and therefore the issuance and sale of securities by them usually does not require significant work: the market is always ready to accept them in large quantities. However, although they have a high degree of reliability, these securities do not always provide high returns. Nevertheless, precisely because of their reliability, there are always segments of the population (pensioners, single people, families who have lost their breadwinner, etc.) who, not wanting to take risks, prefer to invest their funds in such securities.
2. Institutional investors, i.e. various financial and credit institutions that carry out transactions with securities (commercial and investment banks, insurance companies, pension funds, etc.). Many of the institutions pool the funds of various investors (legal entities and individuals) and look for opportunities to invest them in income-generating securities. They strive either to take control of shares, or, in order to avoid risk, to place their capital between different sectors of the economy. Significant funds of the population deposited in commercial banks are concentrated in their trust departments, the services of which are used by millions of people. To ensure the safety of these funds and prevent bankruptcy, the state regulates the activities of institutional investors in the securities market.
3. Individual investors— various individuals, including owners of small venture business enterprises. Securities of small enterprises always carry considerable risk: in Western Europe, for example, every year about 3/4 of the total number of these enterprises go bankrupt and disappear. At the same time, some small enterprises turn out to be very promising and profitable: it was in small enterprises that the production of electronic computer equipment, rockets, many household items, etc. began. Some small businesses can successfully engage in export operations (for example, the production of woolen and leather goods, haberdashery, etc.). Therefore, the economically active part of the population, which is prone to risk, purchases shares of these enterprises counting on high dividends.
4. Securities market professionals- brokers and dealers. They have access to information and the necessary connections - all this makes it easier for them to deal with securities. Dealers carry out these operations on the greatest scale, as they have significant capital. As a rule, brokers and dealers do not hold purchased securities for long: when market conditions become favorable, they sell them. Such transactions on the securities market are openly speculative in nature.
In each country, the circle of securities market participants, as well as the conditions for their participation in the market, are determined by the state. State legislation in this area reflects the specifics of the state of production and finances of the country and undergoes changes in the event of an economic crisis.
4. Primary (over-the-counter) securities market: its role and features
The securities market serves the process of capital reproduction. Depending on the role it plays in the reproduction process, it is usually divided into primary and secondary markets.
Primary market is the market on which the first issued securities are placed. Its main participants are issuers of securities and investors. Issuers in need of financial resources for investment in fixed and working capital determine the supply of securities on the stock market. Investors looking for a profitable area to apply their capital create demand for securities. It is in the primary market that temporarily free funds are mobilized and invested in the economy. But the primary market not only ensures the expansion of accumulation on the scale of the national economy. ‘In the primary market, free funds are distributed among industries and areas of the national economy. The criterion for this placement in a market economy is the income generated by the securities. This means that free funds are directed to enterprises, industries and areas of the economy that maximize income. The primary market acts as a means of creating an effective structure of the national economy from the point of view of market criteria; it maintains the proportionality of the economy at the current level of profit for individual enterprises and industries.
Consequently, the primary securities market is the actual regulator of the market economy. It largely determines the size of accumulation and investment in the country, serves as a spontaneous means of maintaining proportionality in the economy, meeting the criterion of profit maximization, and thus determines the pace, scale and efficiency of the national economy. The primary market involves the placement of new issues of securities by issuers. In this case, corporations, the federal government, and municipalities can act as issuers. The importance of these issuers in the market is determined by the state of the economy in the country and the general level of its development. Chronic government budget deficits in most countries determine the predominant role of the state in the securities market. Thus, in the USA in 1989, the state accounted for up to 75% of all borrowings, in Russia in 1995 - about 70%.
Buyers of securities can be individual and institutional investors. Moreover, the relationship between them depends both on the level of economic development, the level of savings, and on the state of the credit system. In developed countries, the securities market is dominated by institutional investors. These are commercial banks, pension funds, insurance companies, investment funds, mutual funds, etc.
Although the basis of the securities market is the primary market and it is this that determines its overall scale and pace of development, its volume in developed capitalist countries is currently relatively small. The issuance of shares to finance investment in production activities is associated with the establishment of new companies and the reorganization of private companies in high-tech industries that use risk or venture capital. At the same time, the source of venture capital is funds from institutional and individual investors who, having large assets, can afford to “take risks.” For the majority of small firms, which arise in the thousands in traditional sectors of the economy, there is no real opportunity to reach a size that allows them to issue shares.
The second reason for modern corporations entering the securities market is the need to reduce the share of borrowed capital in the total capital of corporations.
In some countries, the ratio between equity and debt capital is established by law.
Thus, the issue of new shares at the present stage of development of the securities market in developed countries is very insignificant and is not always associated with the mobilization of free monetary resources to finance the economy. This means that in developed countries there is not only a decrease in the scale of the primary securities market, but in parallel there is a decrease in its role as a regulator of investments and the economy as a whole.
The placement of securities on the primary market is carried out in two forms:
1) by direct contact with investors;
2) through intermediaries.
5. Secondary securities markets: stock exchange. Over-the-counter (street) securities market. Characteristics of these markets
The primary securities market presupposes the mandatory existence of a secondary market. Moreover, the existence of a primary market in the absence of a secondary market is practically impossible.
Secondary market is a market on which securities are circulated in the form of resale of previously issued ones and in other forms. The main market participants are not issuers and investors, but speculators pursuing the goal of making a profit in the form of exchange rate differences. The content of their activities comes down to the constant purchase and sale of securities. Buying cheaper and selling more expensive is the main motive of their activities.
The secondary market necessarily carries an element of speculation. Since the purpose of activity on it is income in the form of exchange rate differences, and the exchange rate value is formed under the influence of supply and demand, there are many ways to influence the price of securities in the desired direction. As a result, in the secondary market there is a constant redistribution of property, which always has one direction - from small owners to large ones.
The migration of capital is carried out in the form of its overflow to places of necessary application and the outflow of capital from those industries and enterprises where there is a surplus. The mechanism of such a movement boils down to the following: the demand for certain goods and services grows, their prices increase, profits from their production grow, and capital flows into these industries, released from those branches of production for which the demand for products is decreasing and which are becoming less profitable.
Thus, the secondary market, unlike the primary market, does not affect the size of investments and savings in the country. It only ensures the constant redistribution of funds already accumulated through the primary market between various economic entities. Since the goal of stock exchange speculators is to obtain maximum income in the form of exchange rate differences, they sell securities of enterprises that have exhausted their opportunities for profit growth and buy securities of promising enterprises and sectors of the economy.
As a result, the functioning of the secondary market ensures the constant restructuring of the economy in order to improve its market efficiency and is as necessary for the existence of the securities market as the primary market.
However, the role of the secondary market is not limited to this. The secondary market ensures the liquidity of securities, the possibility of their sale at an acceptable rate, and thereby creates favorable conditions for their primary placement. The ability to turn securities into the form of cash at any time is a prerequisite for investing in securities, since the source of invested loan capital is temporarily free cash capital and funds that can only be used in accordance with the basic principles of credit.
The secondary securities market, concentrating the supply and demand of circulating securities, forms the equilibrium rate at which sellers agree to sell and buyers agree to buy securities, which is necessary when redistributing loan capital between industries and spheres of the economy, between business entities.
Resaleability is an important factor taken into account by an investor when purchasing securities on the primary market. The function of the secondary market is to balance the securities market and ensure liquidity. A liquid market is characterized by a small gap between the seller's price and the buyer's price; slight price fluctuations from transaction to transaction. Moreover, the higher the number of participants in the sale and the possibility of prompt resale of securities, as well as the higher the percentage of novelty of the securities offered for sale, the higher the liquidity of the market.
The secondary market serves as an integral part of any developed securities market. It should, however, be taken into account that savings bonds, registered shares sold to employees of a given enterprise, are not traded on the secondary market. They are implemented through the mechanism of re-registration of the rights of their owners in depositories, commercial banks or joint-stock companies themselves.
There are two main organizational types of secondary securities markets: organized - exchange; unorganized – over-the-counter (street). In turn, both take various forms of organization.
The simplest form of organizing stock trading is the spontaneous (street) market. Here, sellers and buyers, communicating with each other, determine the level of supply and demand for certain securities and enter into transactions directly with each other. Concluding a transaction in a spontaneous market depends on how well chance brings sellers and buyers together, and the conditions for carrying out different trading operations can vary significantly even when they occur at the same moment. A spontaneous market is characterized by: the absence of a unified securities exchange rate and comprehensive information about the market; many traders.
Over time, spontaneous stock markets are organized (example: the American Stock Exchange in New York is an organized spontaneous market) or give way to other forms of organizing securities trading. One such form is simple auction markets. Short-term government treasury bonds are distributed through simple auctions, and investment auctions organized by the property fund operate.
In addition to simple auctions, double auction trading systems in the form of call markets or continuous auctions can be used in the securities market. In such systems, not only buyers compete for the right to purchase securities, but also sellers compete for the right to sell them.
Licensing of those who trade securities or advise investors is essential to their activities.
Over-the-counter trading arises as an alternative to the stock exchange. Many companies could not go public because their performance did not meet the requirements for their registration on the exchange. Currently, the majority of all securities are traded over-the-counter. These are shares of small firms operating in traditional industries, shares of large companies established in new sectors of the economy, potentially capable of becoming major corporations, securities of credit institutions that traditionally limit the circulation of their securities to over-the-counter circulation, state and municipal securities, new issues shares
OTC trading is carried out by specialists: brokerage and dealer companies, often combining their functions. In over-the-counter trading, there is no single physical center for executing transactions, and purchase and sale transactions are carried out through telephone and computer networks. Prices are set through negotiations, according to the rules governing over-the-counter trading, which are always less stringent than the trading rules in force on the exchange.
However, this does not mean that trading in securities in over-the-counter circulation is spontaneous. Over-the-counter turnover has its own organizational system.
The traditional form of the secondary securities market is stock Exchange- an organized, regularly functioning market for securities and other financial instruments, one of the regulators of the financial market, servicing the movement of monetary capital.
The role of the stock exchange in the country's economy is determined primarily by the degree of denationalization of property, or more precisely, by the share of joint stock ownership in the production of the gross national product. In addition, the role of the exchange depends on the level of development of the securities market as a whole.
The main functions of the stock exchange include: mobilization and concentration of free cash capital and savings through organizing the sale of securities; investment by the state and other business organizations by organizing the purchase of their securities; ensuring a high level of liquidity of investments in securities.
The stock exchange makes it possible to ensure the concentration of supply and demand for securities and their balance through exchange pricing, which truly reflects the level of efficiency of the functioning of share capital.
The stock exchange and the institutions of the organized securities market represent a system that is characterized by a high degree of orderliness and responsibility for the decisions made. Its functioning largely determines the efficiency of the stock market and the degree of influence on economic processes in the country.
In organizational and legal terms, a stock exchange is a financial intermediary institution with a regulated operating mode, where trade transactions are carried out between sellers and buyers of stock values with the participation of exchange intermediaries according to officially established rules. These rules are established by both exchange (Exchange Charter) and state legislation (RF Law “On the Securities Market”, etc.). It should be kept in mind that the stock exchange itself and its personnel do not deal in securities. It only creates the conditions for them, services these transactions, connects the seller and the buyer, provides premises, consulting and arbitration services, technical services and everything necessary for the transaction to take place.
Taking into account the legal status in world practice, there are three types of stock exchanges, namely: 1) public law; 2) private; 3) mixed.
Public legal stock exchanges are under constant state control. The state participates in the preparation of the Rules of exchange trading and monitors their implementation, ensures law and order on the exchange during trading (often with the help of the police), appoints stockbrokers, removes them from work, etc. The public legal type of stock exchange is common, for example, in Germany and France.
Stock exchanges as private companies are created in the form of joint stock companies. Such exchanges are independent in organizing exchange trading. All transactions on the stock exchange are carried out in accordance with the legislation in force in the country, violation of which implies certain legal liability. The state does not undertake any guarantees to ensure the stability of exchange trading and reduce the risk of trading transactions. This type is typical for England and the USA.
If stock exchanges are created as joint stock companies, but at least 50% of their capital belongs to the state, they are classified as mixed organizations. These exchanges are headed by elected exchange bodies. However, the exchange commissioner supervises exchange activities and officially registers exchange rates. Similar exchanges operate in Austria, Switzerland and Sweden.
Membership in stock exchanges is attractive to securities market participants not because of the profitable investment of capital, but because of the opportunity to create a rich information space that reflects the real market conditions, and some privileges (priorities) that they receive in the trading process (preemptive right to purchase those securities, the number of which are limited). Unequal status of members of the stock exchange, temporary membership, leasing of places and their pledge to persons who are not members of this stock exchange are not allowed.
The requirements for members of stock exchanges are, as a rule, established not only by the laws of the country, but also by the rules of a particular stock exchange. The composition of stock exchange members varies from country to country. In the USA and Great Britain, members of exchanges are only citizens (individuals), in Japan - only organizations (legal entities), in Italy, Germany - both citizens and organizations. In Russia, members of stock exchanges can be legal entities, as well as state executive bodies, whose main tasks include carrying out transactions with securities. Transactions on the stock exchange can only be carried out by its members.
The strict procedure for introducing securities to the stock exchange allows us to identify the most reliable and profitable stock instruments.
Securities entering the stock exchange are checked by a special listing commission. The purpose of listing is to verify the financial position and management of the issuing company, which is carried out on the principles of audit.
6. National features of the structure of securities markets in developed countries
A peculiarity of the market in developed countries is the placement of monetary securities through intermediaries, whose role is played by investment banks. The relationship between the issuing company and the investment bank is based on an issue agreement. Investment banks, together with the issuing company, determine the terms of the issue, starting with the amount of capital and ending with the timing and method of placing securities, and carry out their direct placement.
In accordance with the issuance agreement, the investment bank places securities either as a buyer or as an agent. Typically, he purchases the entire issue, i.e., he assumes financial responsibility for the entire issue (underwriting). Less commonly, investment banks act as an agent. At the same time, their role can either be limited to commission functions, or, along with these functions, they take on the responsibilities of a guarantor of the placement of the issue and, if it is impossible to sell the securities within the established period, they must purchase them at their own expense.
Regardless of the functions of the investment bank under the issue agreement, its mandatory condition is the “market exit clause”. It allows you to cancel the agreement in the event of extremely unfavorable developments in the market (for reasons beyond the control of the parties).
OTC market
abroad also developed. In the United States, the basis of over-the-counter trading is NASDAQ, created by the national association of stock market leaders and representing a communication system that allows transactions with billions of shares to pass through its channels. Membership in NASDAQ requires mandatory registration by companies of their securities in accordance with current legislation and their compliance with certain requirements for the amount of assets, profit, number of shareholders, number of outstanding shares, their exchange rate, etc.
The international securities market consists of two sectors. Firstly, this is a sector of securities that have appeared on the international financial market and represent the result of economic relations existing between countries at the state and corporate level. This sector also includes securities issued bathed by financial institutions of various international organizations (UN, EU, OECD, etc.). Secondly, this is the sector of national securities entered for sale on the international market.
The international securities market is characterized by many constant foreign exchange transfers and is therefore highly affected by changing exchange rates. States whose economic entities take part in transactions with securities on the international market, exercise control over them and regulate them, and pursue a policy of protectionism. Russia became a participant in this market after the State Duma adopted laws allowing state-owned enterprises, as well as private capital, to carry out relevant activities.
The development of international trade in securities encounters a number of difficulties: state control and restrictions, taxation in importing and exporting countries, customs duties, the complexity of mutual settlements, etc. However, since all countries are aware of the need for interstate trade in securities serving intercountry capital migration, then these difficulties are resolved with the help of bilateral and multilateral agreements and improvement of the settlement mechanism.
An obstacle to the development of this trade is the need to send securities from one country to another. Shipping is associated with risk, and therefore with high insurance payments and postal rates. In addition, it requires a certain time, which in some cases may be undesirable (in conditions of rapidly changing market conditions).
Currently, a procedure has been developed and legislated (most developed and many developing national securities markets participate in it), facilitating various market entities to actively participate in international trading in securities, including making complex arbitrage transactions. This procedure helps foreign companies list their shares on national exchanges (sell on the over-the-counter market) and relieves them of many of the hassles associated with sending securities from country to country.
The exchange system in countries where one exchange, located in the main financial center of the country, dominates, and the rest of the organized securities markets are regional in nature, is called monocentric. Monocentric exchange systems are available in the UK (London Exchange), France (Paris Exchange) and Japan (Tokyo Exchange).
In a polycentric system, in addition to the main exchange, there are one or more large stock exchanges. A similar system is available in Canada (exchanges in Toronto and Montreal), Australia (exchanges in Sydney and Melbourne), and Germany (exchanges in Frankfurt am Main, Düsseldorf, Munich and Hamburg). In the USA, the exchange system does not fully correspond to the above classification: there are several large exchanges in the country, but the leading role is played by one - the New York (the world's largest stock exchange).
In a monocentric exchange system, securities issued in foreign countries are traded on only one main exchange; in a polycentric exchange system (as in the USA), they are traded on several largest exchanges. Therefore, the flows of foreign securities on national stock markets are characterized by a high degree of monopolization.
Exchange activity, under the influence of new technology, is undergoing major changes. Electronic technology leads to the emergence of automatic trading systems. With the help of remote terminals, exchange trading goes beyond national borders, which creates the prerequisites for the unification of exchanges in different countries. In Western Europe, the process of creating a single European exchange has begun (this is facilitated by the introduction of the euro). Thus, a project to create a Central and Eastern European Securities Exchange is being implemented in Vienna. In the United States, there is also a process of consolidation of stock exchanges and their joint use of clearing and settlement systems.
The most important element of the institutional structure of the international securities market are intermediaries. Their functions include organizing the placement of new issues of securities, executing orders for the purchase and sale of securities traded on the secondary market, and managing capital, which, on behalf of their owners, is invested in shares and bonds. In the latter case, intermediaries act as investors.
International trading in securities is mediated by private commercial and investment banks. While the former have a wide field of activity, the latter are specialized and operate in the international and national securities markets. In the USA, Canada and Japan they are called investment banking firms, in the UK - merchant banks, in Switzerland - private banks. Despite the trend towards universalization of banking activities, the differences that exist between commercial and investment banks remain.
In 1933, the US Congress passed the Glass-Steagall Act, according to which commercial banks were prohibited from engaging in securities transactions. Their departments, which were previously involved in these operations, were transformed into independent investment banks. They were similarly. The banking systems of Canada and Japan were built. One of the reasons for this transformation was the massive nature of operations with securities, which required the organization of a special banking institution for their effective implementation.
In the 60-70s. the differences between the activities of commercial and investment banks began to decrease. The first reason for this is that legislation in the United States has moved to “soften” the Glass-Steagall Act. The second reason is the rivalry between the two types of banks and their foreign branches. The latter, operating in different countries, not being controlled in all respects by national legislation, began to violate it in the interests of obtaining greater profits: foreign branches of commercial banks began to engage in transactions with securities, and investment banks - in commercial lending.
Investment banks, in connection with the development of the international securities market, led the financial syndicates created in the primary market, engaged in the issue and placement of shares and bonds. Commercial banks pushed aside investment banks when placing Eurobonds on the primary market; In the secondary market, investment banks maintain a strong position.
In national capital markets, the concentration of investment banking business has reached a high level, and therefore the expansion of investment banking operations abroad has become the main direction of their growth. It is thanks to this that the some powerful investment and financial groups operating on the international securities market, such as the American Merrill Lynch, Solomon Brothers, Morgan-Stanley, etc.
Investment banks are traditionally formed in the form of partnerships, which allows them to significantly limit information about their activities, but at the same time limits their capabilities. In the international securities market, commercial banks represent financial power greater than investment banks. In addition, they concentrate large blocks of shares in non-financial companies, i.e. industrial corporations, which instruct them to place their shares.
7. Features of the structure of the securities market in the Russian Federation
In Russia, the functioning of the securities market and the composition of its participants are determined primarily by the Federal Laws “On the Securities Market”, “On Joint Stock Companies”, as well as a number of other regulatory documents.
The potential and current participants in the securities market in Russia are joint-stock companies, most of which were created on the basis of privatized enterprises. The emission activity, as the practice of the 90s showed, of newly created joint-stock companies is much higher than that of joint-stock companies that arose as a result of the privatization of state property, the management of which restrains emissions so as not to lose control over them. Many joint stock companies have high liquidity of their assets (enterprises in the oil and gas industry, metallurgy, energy, communications, timber processing, etc.).
Participants in the securities market are also commercial banks (universal banks combine commercial and investment activities), non-banking investment institutions that have licenses of a financial broker, investment bank and investment consultant. The Central Bank of the Russian Federation (about 90 territorial departments) and the Savings Bank of Russia (42 thousand territorial banks, branches and branches) act as a dealer and brokerage network. In 1993, many banks began to create a network of branches specializing in securities transactions.
The most important supplier of securities to the market is the Russian Federal Property Fund (RFFI), created to sell shares of privatized enterprises that are federal property. In total, the Russian Federal Property Fund must sell shares in approximately 80% of all joint stock companies created on the basis of this property. For the same purpose, there are more than 90 property funds of republican, regional, regional and city significance, selling shares of enterprises of various levels of ownership.
Participants in the securities market are also organizations that are part of the depository and clearing network, using several telecommunication networks operating on a national scale.
All participants in the securities market constantly need detailed information about its condition. The responsibility to collect and disseminate information lies with all participants in the securities market, but primarily with the Central Bank of the Russian Federation, which transmits it to approximately 300 regional information centers. The Central Bank of the Russian Federation must transmit only open information that does not violate commercial secrets. The goal is to ensure access to this information to all market participants (the fee for information should not exceed the cost of its distribution).
Russian legislation provides for the possibility of an initial public offering of shares through an emission syndicate through a public announcement of a subscription to securities at an auction based on a competition of applications; by placing securities through an organized stock market (exchange). An issuing syndicate is formed after the procedure for placing securities has been determined, and the main purpose of its creation is to distribute responsibility for the placement of securities to several intermediary firms, as well as to conduct the initial placement as quickly as possible. Depending on the functions assumed, the members of the issuing syndicate are divided into a management company, an underwriter and sales agents. All activities of the issuing syndicate participants are aimed at facilitating a successful initial public offering of securities.
In terms of liquidity, the Russian market is far inferior to the markets of developed countries. In Russia, the government securities market, which has the appropriate infrastructure, and the stock market of no more than 200 joint-stock companies (oil, gas, telephone network, electricity, etc.) are liquid. The secondary market for shares of manufacturing companies is in its infancy.
In Russia, the organizational center for over-the-counter turnover is the Russian Trading System, which unites broker-dealer companies in the central region and the north-west.
Stock exchange in Russia. In our country, in accordance with current legislation, stock exchanges were created first as closed joint-stock companies, and then as non-profit partnerships and must have at least three members. Only its participants could be members of the exchange.
The stock exchange has received the status of an organization whose activity is to ensure the necessary conditions for the normal circulation of securities, determine their market prices and proper dissemination of information about them, and maintain a high level of professionalism of securities market participants. Stock exchanges in Russia are non-profit organizations, they do not pursue the goal of making their own profit, their activities are based on self-sufficiency, they do not pay income from their activities.
Money market Russia is in a state of inflation. The latter, if it does not go beyond certain boundaries, can play a positive role. So, if GDP grows by 5% annually, and the amount of money in circulation increases by 6-7%, then this facilitates the implementation of increased GDP and contributes to positive processes in the economy. If, for example, with annual GDP growth of 5%, the amount of money in circulation increases from 10 to 20% or more, then galloping inflation occurs, destroying the normal economic process. In Russia in 1995, GDP decreased by 4%, the increase in money in circulation was more than 50%, therefore, inflation took place, which also slowed down the issue of short-term means of payment. Thus, this part of the country's financial market was in a state of crisis.
Loan capital market– currently there is no cheap short-term loan in Russia. Commercial banks operating in the country provide such loans only with reliable collateral and high interest rates. Despite this, the lack of working capital forces many enterprises to resort to this loan. A long-term loan necessary for modernization and creation of fixed assets (funded loan) can be obtained almost only in the form of a rollover loan - a loan at a floating (periodically revised) interest rate. Consequently, the crisis situation is also typical for this part of the financial market.
The centrally planned economy, led in Russia by the State Planning Committee for 70 years (1921-1991), was never able to overcome the shortage of goods in the country (especially consumer goods). The restoration of market relations leads to the civilized development of the economy and society. The need of enterprises for additional capital may be associated with various circumstances. The main ones are the creation of new and modernization of old fixed assets, as well as the replenishment of working capital. All these needs are directly related to market conditions, changes in which occur within a certain time frame. Therefore, the enterprise must receive the necessary funds within a certain period, i.e. as long as favorable market conditions exist.
This is difficult to do in Russia—bank credit is expensive and limited, and the securities market is underdeveloped. In countries with developed market economies, obtaining additional capital is much easier, primarily through securities. Under normal conditions, the issuer can mobilize the capital it needs in one and a half to two months and obtain the right to dispose of it. The securities market is in many ways the best and most accessible source of financing for economic growth.
Stocks and bods market. This market was practically absent in Russia for more than 70 years. Its development, which began in the late 80s, cannot be a one-time process. This is explained by the fact that the development of the securities market is directly related to the transformation of property relations (primarily with the privatization and corporatization of state-owned enterprises), as well as with changes in the financial policy of the state and municipalities. Currently, to cover the budget deficit, the state is increasingly resorting not to issuing banknotes, but to issuing government securities. Municipalities are also taking this same path. Only recently began to develop in Russia.
The securities market in Russia is characterized by a significant number of regional markets with their own specifics. One of them is the securities market in St. Petersburg. Its peculiarity is a certain regional isolation with a focus on the North-West region of the country. The active participants in the market are commercial financial banks, brokerage firms, investment funds, financial companies, as well as government agencies involved in privatization. The main types of securities traded on it are government (municipal) bonds, shares of commercial banks and enterprises. Operations with foreign securities also began. A common process on the St. Petersburg securities market is their initial placement.
Secondary circulation of securities has low turnover due to their low liquidity and low profitability. Individual, largely random, transactions for the purchase and sale of securities do not reflect their real rates. The development of the regional market is also negatively affected by the lack of highly professional intermediaries capable of reviving this market and giving it a civilized character. Nevertheless, in St. Petersburg, as in a number of other parts of Russia, the regional securities market is a reality that will receive further development in the near future.
The stock market is under the control of the state: stock exchanges, stock departments of commodity and currency exchanges receive the right to conduct exchange activities only after receiving the appropriate license from the Ministry of Finance of the Russian Federation (it can be withdrawn in the event of inactivity of these organizations or their violation of legislative norms).
In Russia, the securities market is at the stage of its formation. In conditions of massive corporatization of state-owned enterprises, the creation of new joint-stock structures that are in dire need of funds for investment, and constant borrowing of funds by the state, the primary market serves as the main segment of the securities market.
However, due to the weak development of market relations, inflation, and general instability, the primary market in Russia today does not perform the functions of regulating the economy.
The crisis of the Russian securities market cannot last forever; it will inevitably be replaced by its growth. Foreign theories contain global experience in overcoming crises that affected securities markets in different countries.
It is possible to determine the main conditions under which the Russian securities market will be able to overcome the crisis and begin positive development : market functioning securities will be placed under the control of the state, which forms its legislative framework and monitors its compliance; privatization of state property will be carried out gradually, taking into account the investment opportunities of the Russian capital market; at the same time, the destruction of productive forces will not be allowed; the first priority will be reviving the confidence of domestic and foreign investors to Russian securities and the banking system ; reforming the tax system will be carried out taking into account the interests of investors, primarily in the real sector of the economy; will an extensive training program has been completed experienced securities market professionals; there will be no mechanical use of foreign experience in the development of the securities market without taking into account Russian specifics
Literature LEGISLATIVE REGULATION OF THE SECURITIES MARKET Problems of securities 2 Economic nature and role of government securities
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