Cash market for securities. Securities market stock market. What is traded on the stock market

Candidates of Economic Sciences M. SAFRONCHUK and I. STRELETS.

The market can be called a unique world, where the concept of "speculation" does not sound negative, but rather positive. valuable papers... Stocks and bonds, banks and stock exchanges, exchange rates and financial crashes - more and more they enter our life and influence it. Even without playing on the stock exchange, many Russians have recently become holders of securities. The magazine has repeatedly written about these new financial realities (see "Science and Life" No. 9, 11, 1994, No. 2, 1995). We turn to this topic again precisely because the number of people who are introduced to the securities market is constantly growing. And among them there are many who find it difficult to deal with economic intricacies independently and even with the help of special literature. This article is devoted to the basics of the securities market mechanism and the peculiarities of our domestic market.

Trading floor of the Russian Exchange.

The yield on government short-term bonds (GKO) in July 1998.

What do economists call a market? Certainly not a market square on a sunny day or a supermarket. The concept of a market is abstract and not associated with a specific location. This is the interaction of supply and demand for goods and services, as a result of which their market price is formed. However, for economists and the concept of "goods" has a broader meaning. The object of supply and demand can be not only industrial, consumer goods and services, but also the money supply (then we are talking about the money market), capital (capital market) and its element - securities.

The securities market is a huge and in many ways unique economic empire. The goods here are not passed from hand to hand, they cannot be touched. The sale and purchase of, say, a block of shares can be carried out many times during the day, but will not be accompanied by the physical movement of real objects. The product lives only on paper and the transfer from the seller to the buyer is carried out through accounting, that is, rewriting - something like mutual offset.

Stock exchange

Many remember (especially thanks to foreign films) stories of fantastic enrichments that occur on the stock exchange. And it is very curious to look here, or even better - to take part in the exchange game.

But it was not there! "Who are you, gentlemen? Ordinary citizens or small legal entities? - will meet you at the entrance. "Sorry, but you are not on the stock exchange list."

To gain access to the stock exchange and put your shares on the stock exchange, you need to be a very large, stable corporation with an impeccable reputation. Shares of second-rate companies are not allowed for quotation (purchase and sale). There is a concept of listing - a list of securities of those companies whose financial position has been verified by experts of the stock exchange.

Each exchange has its own listing criteria, but they are all very serious and difficult to fulfill. For example, on the New York Stock Exchange (NYSE), the easiest requirement is to pay a $ 29,350 entry fee. Then you need to make payments from each share, and also pay an annual commission to the exchange administration in the amount of up to 50-60 thousand dollars. And here are more requirements: attract at least two thousand investors who would agree to buy 100 or more shares from your company each, issue 1 million shares, the holders of which will be ordinary shareholders, not the company. At the same time, over the past two years, you must achieve a profit of $ 7 million per year and more, and the value of the company's property must be at least $ 18 million.

Such high requirements involuntarily raise the question: is it possible to do without an exchange? Can the company sell its shares elsewhere? Of course. For this, there is an over-the-counter turnover, where securities are also bought and sold.

Does this have something to do with the black market?

Not at all. The modern OTC market is an extensive network of large and reputable commercial banks, investment companies and funds, united by a single computer system and electronic communications. However, in order to obtain the right to issue (issue) securities, it is necessary to become a fairly large company.

Let's say you started a corporation or industry group. You are respected, you are considered. But in the investment bank where you should apply, you will first of all be introduced to the list of requirements for reputable clients. You cannot do without this bank: it is the investment bank that serves as the place of the initial placement of shares and bonds. And you will have to unquestioningly agree with all his requirements.

They will send a lawyer who will shovel all contracts, patents, licenses, even get to the statutory documents - you have to accept. An auditor will arrive and begin to reconcile your financial statements - it's nothing you can do. You will need information about all the activities of the firm and its results - you must provide.

Based on the comprehensive information contained in a huge number of documents, the investment bank makes a conclusion about the competence of the company's management, about financial situation the firm itself and its partners, determines the competitiveness of the firm, the prospects for its development and the industry as a whole. An investment bank has the right to be so meticulous, since it is he who takes on the risks associated with the further placement of the securities it has acquired among other banks, funds, companies.

What are securities? These are documents confirming the right of its owners to receive expected future income under certain conditions. Among the variety of types of securities, stocks and bonds have become the most common and popular. When deciding on the issue (issue) of securities, the corporation chooses those types that will best solve the tasks. And, accordingly, it acquires certain rights and obligations. Let's consider them in relation to stocks and bonds, and also talk about issuers (entities issuing securities) and investors (entities buying securities).

Stock

This is a document certifying the contribution of a share (share) to the capital of a joint stock company. It gives the right to receive part of the profit of a joint stock company in the form of a so-called dividend.

The first joint-stock companies arose at the beginning of the 17th century: the East India Company in England (1600), the East India Company in Holland (1602). Currently, in developed countries, the joint-stock form of enterprises is the leading one, and therefore the action has long become an integral attribute of the modern securities market.

We have already talked about how many difficult problems need to be solved in order to become an issuer. It is much easier to become an investor: it is enough to buy a share of the joint stock company you are interested in. But the investor has no right to demand from the joint-stock company to return the amount paid for the shares. The only way to get money is to sell the share to another legal entity or individual on the secondary securities market.

There are various promotions. By the nature of the order, they are divided into registered and bearer shares. All rights under registered shares can be exercised only by the specified person. For example, if your name is written on the form, then no one else can receive dividends - only you yourself.

If we are talking about bearer shares, then the person who presented them has the rights to these shares. Today the bulk of shares are bearer shares.

Shares are also divided into common and preferred. An ordinary share gives the right to participate in the meeting of shareholders. The owners preferred shares do not participate in voting at shareholders' meetings, but have certain privileges in relation to dividends (fixed amounts, priority right to receive). The holders of ordinary shares receive dividends depending on the profits of the joint stock company. It turns out that the privileges in the area of \u200b\u200bdividends are, as it were, exchanged for rights in the area of \u200b\u200bcontrol. Most of the shares issued by corporations are classified as ordinary.

When we buy securities, then, first of all, we are interested in their yield and market price, that is, the stock price. But isn't the price of a share indicated on it, isn't that what the face value of the share says? The fact is that the denomination is a convention. It is only relevant for the initial public offering of a share in the primary market, and the investor's share is exactly par. However, as we already know, an investor cannot demand his share back, he can only resell the share. But at what price - it already depends on the current stock price.

The stock price depends on supply and demand, which are determined by many reasons. Since the rate is not determined in advance, there is the possibility of speculation in the securities market. Those market participants who expect the rate to rise will buy shares, hoping to resell them at a higher price in the future. The bulls are called bulls. Those expecting a decline will sell the stock. They play for a fall in the rate, and in stock exchange practice they are called "bears". (For more details see "Science and Life" No. 9, 1991) Who will be in a winning position - the future will show. The stock price is subject to frequent fluctuations, and the principle is implemented in the exchange game: today - you, and tomorrow - me.

A striking historical example of a short game that made it possible to make a fortune of £ 50-60 million is associated with the name of Nathan Rothschild. During the Battle of Waterloo in 1815, he spread a false rumor on the London Stock Exchange about the defeat of England, and its government securities began to sell off with excitement. Rothschild himself hastily bought up the depreciated "pieces of paper" at a symbolic price. However, the official announcement of the victory was not long in coming. The price of securities rose sharply, and ... the insidious plan was brilliantly realized.

Bond

Historically, bonds arose before stocks: even the Athenian state on the eve of the Peloponnesian war (V century BC) placed a loan in the amount of 10 thousand talents. A bond is a security that gives the right to receive a guaranteed income.

Unlike a stock, a bond does not give the right to vote in decision-making at shareholder meetings. The paid income is strictly fixed and does not depend on changes in the issuer's profit.

Bonds are fixed-term securities, that is, their value is redeemed over time. They are released for different periods, but we can say that these periods tend to become shorter. In the era of the heyday of the classical type of bonds in Europe, they were issued for an incredible, according to our current perceptions, term: 100-150 years and at an incredible, according to today's perceptions, percentage: 1.5-2% per year. At that time, they were known as a model of reliability: once having invested in a bond, it was possible to easily cut coupons for a number of years. The bond was printed with a special coupon sheet, the number of which was equal to the number of interest payments in the period before the bond maturity. Thus, by taking a pair of scissors and cutting off the coupon, the bondholder was claiming his right to yield on the bond. This is where the expression "cut coupons" came from.

Currently, the terms for which the bonds are issued have been significantly reduced. The main reason is inflation, which devalues \u200b\u200bthe money invested in the bond. There are short-term, medium-term and long-term bonds. Under Russian law, short-term bonds can be issued for up to 1 year, medium-term - up to 5 years, long-term - up to 30 years.

Bonds are issued by private and government issuers. It is believed that the state cannot go bankrupt, therefore government bonds are the standard of reliability. (This is in theory. About Russian realities - a little lower.) But the lower the risk, the less reason to pay a high return on a security. General rule functioning of the securities market states: the higher the yield, the less reliability, and vice versa.

In Russia, the most widespread in the financial market are government short-term bonds - GKOs.

The bond is a debt obligation of the issuer. The buyer of the bond provides a loan to the issuer. Therefore, by purchasing bonds from a joint-stock company, we become not co-owners of this company, as when buying a share, but its creditors.

Choosing securities

The Russian securities market is still in the stage of formation. The explanation is simple: the securities market is a reflection of the state of the real market for goods and services.

Russian investors remain very cautious when making decisions to buy stocks and bonds, which is understandable given the negative experience associated with instability and inflationary trends in our economy. Issuers of securities in the domestic market also often behave rather constrainedly.

Among joint-stock companies in our country, closed-type joint-stock companies prevail: they do not issue their shares to the market, but distribute them within the company, in contrast to open joint-stock companies, whose securities are freely sold and bought on the secondary securities market.

Government bonds are considered the most reliable today. Among them are GKOs, OFZs (federal loan bonds), OGSZ (government savings loan bonds).

World experience says that government securities are almost risk-free (minimal risk), but their profitability is also low. In Russia, in a certain period, the opposite and therefore a unique situation developed: GKOs were both reliable securities and highly profitable - 30% per annum for GKOs, while 10% per annum for deposits with Sberbank. The reasons for this phenomenon lie in the field of politics, but this is a topic for another conversation. Let's just note that one with the other - economics and politics - is closely related. National securities markets of different countries also influence each other. Thus, the global financial crisis at the end of 1997 had an adverse effect on the Russian market.

To the beginning current year OFZs and currency bonds of the Ministry of Finance were considered more promising. According to experts, the situation in this market is in favor of bonds for a period of six months: compared to annual and three-year bonds, they have a small risk, and price fluctuations over this period make it possible to obtain high yields.

Experts believe that over the past year, the municipal bond market has noticeably "matured", that is, has become more civilized. These are, first of all, bonds of St. Petersburg, Moscow and Orenburg, which are also considered to be very reliable.

In the second half of last year, the so-called "rural" bonds were issued (traditional debt registration, in in this case - agricultural producers to the Ministry of Finance on a loan for 1996). These bonds are still few in number, which may hinder the growth of their liquidity (that is, reversibility, mobility), despite the expected prospects of these securities. We emphasize the expected.

The most risky investments on the Russian market are shares. But even in this most speculative segment of the market, glimmers of improvement appeared: the degree of liquidity of shares increased and their riskiness somewhat decreased. An important role in this was played by Russia's entry into the Paris and London clubs of creditors, which attracts foreign investors to the domestic market.

So, when choosing securities that you want to purchase on the Russian market, you should focus, first of all, not only on profitability indicators, but also on the degree of reliability of the issuer and the level of liquidity of this security. The list of the most reliable banks and companies, indicators of profitability and liquidity of government and private securities, as well as analytical reviews are systematically published in such economic magazines as Dengi and Securities Market. Here you can always see the rating of consulting firms explaining, in particular, which securities to buy, which to sell, and which ones are better to keep for now, and other issues of concern to the investor. Detailed information and professional advice greatly facilitate both an experienced and a potential investor in the difficult decision-making process in the securities market.

(The ending follows.)

Details for the curious

ON YIELD OF SHARES AND BONDS

When making predictions about changes in the share price, one can, to some extent, be guided by the dividend paid on the shares of a given joint-stock company. The dividend rate is called the rate of return on a share, it is the ratio of the size of the dividend to the market price of the share. However, the profitability of a share depends not only on the size of the dividend, since low dividends can be paid during the growth of the company, when large investments are made. Therefore, in spite of low dividends, the stock price may rise significantly. Each time you make a decision to buy or sell a stock, you need to consider all this variety of factors.

Let's talk a little more about bond yields, since they are the most popular in Russia today. If the nominal value of a share does not matter when it is bought or sold on the secondary market (a share is an unlimited paper), then in relation to a bond it is fundamentally important to take into account the nominal value and maturity. The point is that the regular fixed income on a bond over a certain period of time is a percentage of its par value as stated on the bond. This also applies to coupon bonds. Let's say the face value of a bond is 1,000 rubles, the maturity is 10 years, and the annual coupon yield is 100 rubles. Therefore, the coupon yield is 10 percent.

However, there are also zero-coupon bonds, for example T-bills, which are sold at a price below par. How, in this case, to determine their profitability in per annum? You can use the formula for the yield of a short-term bond:

(R 1 - R 2): R 2 x 365: t,

where R 1 - price at par, R 2 - selling price, 365 - number of days in a year, t - bond term to maturity (number of days). Suppose a bond is issued for a period of 3 months (90 days) with a par value of 100 rubles. and is sold at a price below par - for 95 rubles.

Substituting the data into the formula, we get a yield of 0.2, or 20% per annum.

Stock market - one of the constituent parts of the financial market, where the securities turnover takes place.

The main function of the securities market is a collateral mechanism to attract investment in the economy. It connects those who have excess income and who need funds. Fulfillment of the function of constantly maintaining economic growth, the securities market provides only if there is free movement of investments... The name of such freedom is liquidity.

Does the existence quality is possible only with such a number of buyers and sellers, which will satisfy the requirements of supply and demand. In developed capitalist countries, liquidity is provided by means of stock market legislation.

This legislation obliges firms (stocks and bonds that circulate on the stock market) to provide investors with meaningful, accurate and transparent information about themselves.

It also strictly regulates market maker firms and broker firms according to the rules of work. The securities market provides a place for organizations that need debt capital and a place for the organizations that supply it.

The securities market, within the framework of the commodity economy, is similar to the market of any other commodity, since a security is also a commodity, on the other hand, it has its own characteristics that are associated with the specifics of the commodity - securities. In modern conditions, the securities market is a sector of the general financial market and therefore it has differences with the real sector of the economy that produces goods and services.

Now the overwhelming number of securities in the securities market exist not in documentary or paper form, but in the so-called uncertified, or paperless form. The rights of the owner of securities, according to the rules of the law, are recorded in a special register, and the securities themselves are absent as “physical securities”.

The growth of the securities market and the growth of the world economy are interconnected. The needs of commodity production contributed to the emergence of a securities market, since the attraction of private capital and their combination with the help of stocks and bonds made it possible to create and develop new industrial farms and enterprises. Therefore, in all capitalist countries of the world, for the development of the economy, it has become important to develop the securities market.

The securities market is an integral part of the financial market, where capital flows from some participants to other market participants. The differences between it and other sectors of the financial market (deposits, bank loans, foreign exchange, money) are primarily in their object, and the similarities between them lie in the way the market is formed, in its relation to the market for real goods, in the significance of the circulation function. These markets are so close that a number of cases make it possible to dispense with a security as a means of payment (for example, a check, a bill). It should be noted that the banknote or bank bill became a consequence of the emergence of modern money.

The securities market includes: primary securities (original) and secondary securities, state and non-state (corporate) securities. These securities are traded across national, regional and international markets.

Main streams

Raising capital in the securities market

For any commercial activity, external source of capital attraction Is the securities market. The internal financial source of the work of a company or enterprise, usually, accounts for the total volume financial resources on average, half, or up to three quarters, required to maintain and expand the circulation of goods and production. Other needs for financial resources are met with the help of external sources: the securities market and the market for bank loans. There are estimates according to which it is known that 75% of external financial resourcescome from the securities market.

Capital investment in the securities market

In order to profit from the sale of securities, you need to find a buyer for them. Therefore, the securities market is at the same time an investment object. money - enterprises, organizations and the sphere of capital increase. As you know, capital can be increased by means of bank deposits (by putting money into a bank account), by means of the foreign exchange market, or by means of investing money in some kind of productive activity (antiques, real estate, etc.). Therefore, the securities market has competition, which are other areas of capital investment, therefore, everything depends on how attractive it is from the point of view of a market participant.

Securities market structure system

FROM the system of the structure of the securities market is very complex. It is divided into urgent and cash; computerized and public; exchange and over-the-counter; organized and unorganized; primary and secondary.

The specific features of the securities market differ from the commodity market - in terms of volume and object. A security is a specific commodity. The ability to bring income in the future - this is the use value of a security. Due to the continuity of the turnover of the securities market, it surpasses the volume of the market for real goods (this is also influenced by the way the market is formed). Commodities have to be produced and securities simply issued. The goods are consumed, and the securities are issued for the purpose of circulation and the income contained in them. Compared to the market for services and goods, the securities market is secondary.

Stock Market - Securities organized on stock exchanges are traded here.
OTC market - securities are traded here, without an intermediary - the stock exchange.

In addition to shares, other types of securities are traded outside the exchange. The exchange market is an organized market, and the over-the-counter market is both an organized market and an unorganized one. In countries with developed market economies, there is currently only an organized securities market, represented by stock exchanges or an over-the-counter electronic trading system.

The securities market depends on the type of trade and is divided into two main forms: public and computerized.

Public Market or (Voice Market) - this is trading in securities, where sellers and buyers (usually stock intermediaries) meet at a certain place, then there is a public, public auction or a closed auction (which is not subject to publicity).

Computerized market - this is trading in securities using modern means of communication and computer networks. This market is characterized by a remote meeting of buyers and sellers. Locations of computerized trading places are located directly or with sellers and buyers or in the offices of firms that trade in securities. There is no public nature of the pricing process in this market, the trading process is automated and there is continuous trading in securities.

It is divided into cash and derivatives markets, since there are terms for transactions with securities.

Cash market (cash market, spot market) - deals are executed immediately in this market. Technically, it happens that such a performance can stretch up to 1-3 days if a physical security is required.

Derivatives market of securities - in this market there is a delay in the execution of the transaction for weeks or months.
The cash market for securities is large. Futures contracts with securities are concluded mainly in the derivatives market.

Depending on what instruments are traded on the market, it can be divided into the money market and capital market.

Monetary - in this market, instruments circulate for a period of at least 1 year (short-term bonds, bank certificate, check, bill of exchange).

Capital market (investment market) - in this market, instruments circulate for a period of more than 1 year (long-term and medium-term bonds, shares).

Classification of the securities market

Classification by the nature of the movement of securities

Indicators of the state of the securities market

main sources legal regulation the securities market in Russia:

Hello!

Raising capital is one of the most important tasks of companies operating in a market economy. And the main place for obtaining funding is the stock market. Therefore, in this article I want to talk in detail about how the structure of the securities market works.

What is Primary Bidding? Where can you make transactions for the purchase of investment assets? How does the urgent section differ from the spot section? What instruments can be traded on stock exchanges? I will try to answer all these questions in a clear and simple language.

The securities market (SM) is one of the components of the general structure of financial markets, which is responsible for the redistribution of capital by means of securities circulation.

This concept combines the entire structure economic relationsarising from the issue and circulation of securities.

In turn, securities are secured by civil property rights. Now all instruments of this type are issued in non-documentary form, and information about their holders is recorded in special depository structures.

RCB structure

The structure of the securities market is quite versatile, it is appropriate to divide it depending on the definition of some characteristics:

• stages of circulation of securities;
• level of adjustability;
• trading location;
• type of trade;
• timing;
• instrumentation;
• residency of participants.

I will describe in more detail below each of these features and their internal structure.

Depending on the stage of circulation of the security

RCB is a complex structure and largely heterogeneous, therefore the circulation cycle financial instruments always divided into two stages, creating separate categories of trades.

Thus, the securities market is divided into the following types:

• primary;
• secondary.

Primary

At the initial stage, securities are issued and placed in the process of circulation on stock markets for their purchase by a wide range of investors.

From the point of view of legislation, at this stage, all economic relations arising from the issue and initial purchase of issued securities are determined professional participants or private investors.

As a result of the initial sale of shares, bonds or other stock assets for investors, the issuer receives cash, which is subsequently used in the structure of its operating activities.

Secondary

The secondary market characterizes all legal relations between the parties in relation to securities previously issued for circulation.

At this stage, cash receipts for the issuer no longer occur, and investors use the liquidity of the instruments, i.e. buying and selling them in search of the best profitability for themselves during secondary trading.

The secondary market is an important component of the overall economic structure, as without it, the success of the IPO is in doubt. After all, not every investor is ready to buy what will subsequently be extremely difficult to sell, essentially freezing his capital.

Depending on the level of controllability

Regarding the conditions of the regulatory structure, securities markets are divided into the following types:

• organized;
• unorganized.

Organized

On organized trading platforms for securities trading, uniform requirements and rules play a special role, which establish all legal and economic aspects in relation to each category of participants.

Unorganized

In unorganized trading in securities, there are no firm, uniform rules for all, and in most issues, participants try to establish individual agreements.

However, it is important to understand that the general requirements of the legislation must be fulfilled by all participants in legal relations, regardless of the form of the regulatory structure of securities circulation.

Depending on the place of trade

Regarding the availability of the trading infrastructure, the RZB can take the following form:

• exchange;
• over-the-counter.

Exchange

This includes organized stock exchanges. The exchange quotation process and control over transactions are carried out by specialists in the field of exchange business.

In addition, in the structure of specialized exchanges, certain requirements are always established for investment instruments, which can be admitted to trading, and the market value of securities is formed by the market, i.e. through the ratio of supply and demand of participants at each time of the auction.

OTC

Trading outside an organized exchange floor takes place through the services of banks, dealers, brokers or individuals, where transactions are made directly with the counterparty, i.e. bypassing the exchange structure.

Feature of such financial relations - the price of assets is set in a random or chaotic manner, it does not depend on supply and demand, but on the individual agreements of the counterparties who are participants in the transaction.

Thus, in unorganized trading, completely identical securities at the same time can be sold at absolutely different prices.

Depending on the type of trade

With regard to the type of transactions, the securities markets are divided into the following types:

• public or voice;
• computerized.

Now the relevance of this division is not so great, since the prevailing number of transactions are carried out through computer systems. But still, I think it is correct to designate both of these methods.

Public or Voice Market

This is a classic type of financial relationship in which participants make their transactions in a specific place through open bargaining.

This can also include individual transactions and the conclusion of agreements between counterparties, which for some reason are not made public. Ie bidding with a limited number of interested parties.

Computerized market

Computerization involves the use of a remote network that unites orders from different participants in stock exchanges or OTC trading.

At the same time, the process of making transactions and fixing participants is fully automated, and the interaction of counterparties to the transaction occurs exclusively through placing orders in the electronic system.

Depending on the timing of transactions with the Central Bank

Regarding the timing of the execution of securities transactions, the following may be:

• cash;
• urgent.

Cash

Cash (spot) is called the RCB, on which transactions for the purchase / sale of financial assets and the rights assigned to them are carried out in real time.

However, from a technical point of view, a deal to buy stocks or bonds is more likely to be officially executed within 1 to 2 days after the date of the transaction. There may be a time gap due to committing a change to the registry.

Urgent

As a rule, derivative financial derivatives are represented in the trading structure of the derivatives section. These are contracts that fix the rights or obligations to execute a transaction with a delayed time horizon.

Basically, it ranges from one to several months.

Depending on the instruments traded on the market

When trading on financial platforms, transactions are made with a large number of stock instruments, which, in turn, have many different characteristics.

Therefore, it is advisable to divide the RCB into the following types:

• monetary;
• investment or capital market.

Monetary

Here are presented instruments, the structure of which assumes a circulation period of less than 1 year.

Such financial assets, for example, include:

• payment certificates;
• promissory notes;
• short-term bonds.

Capital market or investment market

It can be:

• promotions;
• medium and long term bonds.

Depending on the citizenship of market participants

The division by citizenship (residence) of the participants is justified and even necessary. This is due primarily to the fact that the legislation for different categories can be set different requirements, rights, the tax base etc.

With regard to this aspect, the structure of the RZB can divide them into:

• residents;
• non-residents.

Resident market

Stock instruments issued by residents of the country for circulation on domestic market floors are traded here.

Non-resident market

Stock instruments issued by foreign residents for trading on Russian stock exchanges are traded here.

Such assets must fully comply with the requirements and legislation of the country in which they are traded.

Conclusion

In this article I tried to consider the whole structure of securities circulation in a thesis.

Summing up, I would like to note once again that the stock market is an important component of any market economy, which is also our country.

It serves to mobilize economic resources, ensuring the liquidity of investment investments, distribution and redistribution of capital, and also carries out the necessary regulation in this area.

Therefore, everyone who is at least to some extent connected with investments and finance should have knowledge of its structure, requirements and model of activities.

That's all. See you in the comments and the following articles.

The popularity of the stock market is driven by incredible stories of super profits and investment giants, but few people really understand what the stock market is. They only see the outer gloss, not realizing how the mechanism works and what its goals are. In this article we will look at what the stock market is and how to work with it.

What is the stock market in simple words

Stock market is a market system within which securities are circulated between buyers and sellers.

Wikipedia says that the stock market is a set of economic relations in terms of the issue, as well as the circulation of securities between its participants.

As a result, the stock market in simple words is the place where stocks are bought and sold. In theory, such a market is not much different from the grocery or any other market, only securities are the object of sale here, not apples.

The essence of the stock market is that it allows companies to attract investment by issuing securities, and investors can profit from owning shares. It is also an integral part of the economy of any country, making it possible to develop infrastructure and human well-being.

What is traded on the stock market

As mentioned above, securities are traded in the stock market, but they can be different. The following stock market assets are distinguished:

• Ordinary shares - the most common type of asset, which is a share in the ownership of a company with the right to receive dividends and participate in a shareholders' meeting.
• Preference shares - in the stock exchange jargon "prefs", they allow you to receive a fixed income from dividends, but limit the rights to participate in the meeting of shareholders.
• Bondsis, in essence, an IOU that gives the right to receive its face value with interest after a certain period. They can be state, corporate, or municipal.

Thus, different types of stocks and bonds are sold on the stock market. Bills of exchange are not sold at centralized sites, but are transferred personally from the debtor to the creditor. Derivative types of assets (futures, options) are traded in the derivatives market, which is not actually part of the stock market.

Securities market participants

To fully understand the market mechanism, you should also pay attention to its participants:

• issuers;
• investors;
• intermediaries;
• participants in the exchange mechanism.

The companies that issue their shares on the stock exchange are the issuers. The initial issue of securities is called an IPO. Due to this, the issuer receives investments for the development of its business and the growth of the company's profit.

Investors mean several categories of participants:

• Private ( individuals) ... Regardless of the capital, these can be both large investors and small traders.
• Corporate (organizations and legal entities)... Additionally, we can note collective (mutual and investment funds, pension, insurance organizations).
• State ( municipalities) ... The state owns a large share of shares in various companies.

Brokerage companies act as intermediaries. They allow investors to gain access to the market.

Exchange mechanism participants:

• Dealers(market makers) - create liquidity in the market and take on the obligation to quote instruments;
• Depositaries- keep records of securities and store certificates;
• Registrars- keep registers of securities under an agreement with the issuer.

As a result, as in any market, there are personnel who organize trades and allow transactions, as well as intermediaries. Instead of a manufacturer of any product, the issuer of shares acts. The main participants (buyers and sellers) are investors, they are the ones who form supply and demand, as a result, and the price.

What are the stock markets

Depending on the nature of the movement of securities, there are:

• Primary market - only securities issued for the first time as a result of the IPO are circulated here, later the securities are transferred to the secondary market;
• Secondary market- in this market, there is the main turnover of securities that have already passed the IPO and have gained a foothold on the exchange;
• Third market - the over-the-counter market, which covers trading in unlisted securities, i.e. not listed on the exchange;
• Fourth market - large blocks of shares between institutional investors turn around here, individuals do not have access here.

There are stock markets on a territorial basis:

• Russia;
• Great Britain;
• Japan;
• China and many other countries.

There are quite a few different classifications, but they are not of the greatest importance for the investor and his understanding of the structure of the exchange.

How to enter the stock market

In order to start trading on the stock market, it is enough to register an account with a broker. It should be borne in mind that real transactions are opened only with licensed brokerage companies.

To open an account, it is enough to have a passport. The process itself can be performed remotely ( on the internet). After completing the procedure for opening an account, you need to install a special terminal on your computer for opening transactions. All transactions will be carried out in it.

The screenshots below show the trading platform of an experienced broker with whom we have been working for a long time. To open a trade to buy shares, in our example Yandex , it is enough to specify the lot size and click on the button BUY:

The next day, growth was noticeable:

To get money into our account, you need to sell the shares back, that is, close the deal and fix the profit:

The transaction results are displayed immediately below the chart:

You can find a huge number of the most famous companies from all over the world. Minimum deposit to get started with $ 250, but we recommend that you ignore this figure and start with at least 300 USD, because according to the rules of risk management, transactions should be opened for at least 10% of the deposit amount. Also, you can buy shares of several companies and take less risk.

Conclusion

The stock market is a market system in which securities (stocks, bonds) are traded. It allows issuers to receive investments, and investors to earn money from owning shares in companies. The third parties in the market are intermediaries (brokers), as well as participants in the exchange mechanism (dealers, depositories, etc.). Trading in the stock market requires open account from a licensed broker, as well as a deposit made to buy securities.

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Using financial instruments such as securities.

A security, according to the legal definition in (Article 142), is a document of the established form and details, certifying property rights, the exercise or transfer of which is possible only upon its presentation.

In accordance with Art. 128 of the same code is an object of civil rights, the same as a thing, or rather, movable property.

Currently, the overwhelming majority of securities exist not in their historically first - paper, or documentary form, but in the so-called paperless, or non-documentary form. The rights of the owner of a security are recorded only in a special register in accordance with the rules established by law, and the security itself is absent as "physical".

Stocks and bods market is in constant development in line with growth. Its appearance was associated with the needs of commodity production, because without the attraction of private capital and their association by issuing, first of all, shares and bonds, it would be impossible to create and develop new enterprises and branches of the economy. Therefore, it has become an important condition for the development of the economy of all the most developed capitalist countries of the world.

Securities market and commodity market

Within the framework of the commodity economy, the securities market, on the one hand, is similar to the market for any other commodity, because a security is the same commodity, and on the other, it has its own characteristics associated with the specifics of its commodity - securities. The securities market in modern conditions is a sector of the general financial market and in this sense differs from the real sector of the economy that produces.

The securities market is an integral part of the financial market, as it is associated with the flow of capital from one market participant to another. It differs from other sectors of the financial market (money, foreign exchange, the market of bank loans and deposits), first of all, in its object, but it is very similar to it both in the way of formation, and in the importance of the circulation process, and in relation to the market of real goods. The proximity of these markets is so great that in some cases, securities can serve as payment and settlement instruments (for example, a bill, check). It should be noted that one of the prerequisites for the emergence of modern paper money was a banknote, or bank bill.

The securities market covers international, national and regional markets, markets for specific types of securities, markets for government and non-government (corporate) securities, primary (original) and secondary, or derivative securities.

In a simplified and compact form, the place of the securities market is shown in the figure below.

The role of the securities market

The securities market, on the one hand, is an integral part of the financial market, since it allows through the use of securities to accumulate, concentrate and centralize capitals and, on this basis, redistribute them in accordance with the requirements of the market, on the other hand, this is a sphere of capital increase, as and any other market.

Securities market and capital raising

The securities market is an external source of capital attraction in relation to any commercial activity. Usually internal financial sources for the operation of an enterprise or company, consisting mainly of depreciation charges and the reinvested part of net profit, on average, from half to three quarters of the total financial resources required to maintain and expand the production and circulation of goods. The remaining need for financial resources is covered by two main external sources: the bank loan market and the securities market. According to existing estimates, up to 75% of external financial resources come from the securities market.

Securities market and capital investment

To get money from the sale of securities, you need to find a buyer for them. Consequently, the securities market is at the same time an object for investing free funds of enterprises, organizations and the population as a sphere where capital increases. However, capital can be increased either by putting money on a bank deposit, or in the foreign exchange market, or by investing in some kind of productive activity, in real estate or antiques, etc. Consequently, the securities market objectively competes with other spheres of capital investment, and therefore it all depends on how attractive it is from the point of view of market participants.

• rate of return... Market participants compare the profitability of their investments in different markets and their instruments;
• conditions of taxation... Market participants consider the terms of taxation of securities transactions versus taxation in other markets;
• level of risk of investments in securities, i.e., the safety of the funds accumulated in them and the income received;
• service level in the market... How convenient, simple, reliable, etc., is for an investor to work in this market, how protected its participants are from all kinds of market and non-market risks, etc.

In general, about 25-30% of the population's free cash is invested directly in the securities market in developed countries, and about the same amount is invested indirectly through insurance and pension funds (companies), which most their assets are held in securities.

The place of the securities market in the total turnover of financial resources is shown in Fig. 1.2.

A security has a specific use value, which is realized not in the process of consumption, but in the process of circulation.

Structure of the securities market

The securities market has a very complex structure. It is divided into primary and secondary; organized and unorganized; exchange and over-the-counter; public and computerized; cash and urgent.

Stocks and bods market has specific features that distinguish it from the product market, for example:

• by object and by volume... A security is a specific commodity, a title of ownership. The use value of such a product consists only in the ability to generate income in the future. The volume of the securities market, due to the continuity of their turnover, is many times greater than the volume of the market for real goods;
• by the way the market is formed... Real goods must be produced, and the security is simply put into circulation;
• by role in the appeal process... The purpose of producing real goods is their consumption, and the security is issued only for appeal and it brings income;
• by subordinationin economics. Stocks and bods market secondary compared to the market for goods and services.

Structure of the securities market

The securities market is a complex structure with many characteristics and therefore needs to be viewed from different angles.

Depending on the stage of circulation of a security, there are primary and secondary markets. Primary - this is a market that ensures the release of a security into circulation. This is her first appearance on the market. Secondary Is the market in which previously issued securities are traded. This is a set of any transactions with these securities, resulting in a permanent transfer of ownership of them.

Depending on the level of regulation, securities markets are divided into organized and unorganized... In the first, the circulation of securities takes place according to firmly established rules, in the second, market participants agree on almost all issues.

Depending on the place of trade, there are exchange and over-the-counter stocks and bods market.

• Exchange market - it is trading in securities organized on stock exchanges.
• OTC market - it is trading in securities without the intermediation of stock exchanges.

Most types of securities, except for shares, are traded outside exchanges. If the exchange market is inherently always an organized market, then the over-the-counter market can be both organized and unorganized (“street”, “spontaneous”). Currently, countries with developed market economies have only an organized securities market, which is represented either by stock exchanges or over-the-counter electronic trading systems.

Depending on the type of trade, the securities market exists in two main forms: public and computerized.

Public (voice) market- this is a traditional form of securities trading, in which sellers and buyers of securities (usually in the person of stock intermediaries) directly meet at a certain place where public, public trading takes place (as in the case of exchange trading), or closed trading, negotiations are conducted for some reason 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 characterized by:

• no physical meeting point for sellers and buyers; computerized trading places are located directly in the offices of firms trading in securities, or directly with their sellers and buyers;
• lack of a public nature of the pricing process, automation of the securities trading process;
• continuity in time and space of the process of trading in securities.

Depending on the terms for which transactions with securities are concluded, the securities market is divided into cash and fixed-term.

Cash market ("spot" market, "cash" market) is a market for immediate execution of concluded deals. At the same time, purely technically, this execution can be extended for a period of up to one to three days if the delivery of the security itself in physical form is required.

Derivatives market securities is a market with a delayed, usually several weeks or months, execution of the transaction.

The cash market for securities is the largest. Derivatives contracts for securities are primarily entered into in the derivatives market.

• monetary - the circulation period of instruments in this market is not more than one year (bill of exchange, check, bank certificate, short-term bonds);
• capital market (investment market) - the circulation period of instruments is more than one year (stocks, medium-term and long-term bonds).