Functions of the securities market
The securities market is a complex systemrelations of individuals and legal entities, which is based on transactions related to the issue, redemption and circulation of securities. Securities are a means of attracting capital.
The main functions of the securities market, as well asany other market, are divided into two large groups: general market and specific. Common market functions of the securities market determine the similarity of this market with other markets. And the specific functions of the securities market, on the contrary, distinguish this market among others.
Specific functions of the securities market:
- redistribution (securities marketplays an important role in the redistribution of money between different spheres and branches; this function also includes the transfer of money into productive form, financing of the state budget);
- hedging (additional insurance of financial risks).
Common market functions of the securities market:
- Price (the market plays an important role in the formation of market prices);
- commercial (generating income from a variety of transactions produced in the market);
- Information (information on various trade objects appears on the market, and in the future this information is brought to other participants of the commodity market and has a significant impact on them);
- Regulatory (in the market there are certain "rules of the game", practice of dispute resolution, management and control bodies).
The securities market consists of several "minimarket of bonds, the market of bonds, the market of state short-term bonds (GKO), the market of state savings loan (OGSZ), the market of federal loan bonds (OFZ), the market of foreign currency loan bonds, the market of treasury bonds, the market of financial institutions, stock exchanges, stock departments of commodity exchanges.
In addition, the primary and secondary marketsvaluable papers. In the primary securities market, the sale of "freshly issued" securities is thriving. The secondary market has two components: exchange and OTC trade. Exchange trade takes place on stock exchanges, and over-the-counter is street trade. OTC trade is widely used in the west, while in Russia the first option prevails.
The main objective of the securities market is accumulationfinancial resources and their redistribution through the commission of various transactions between market participants. At the same time for the performance of all these operations, securities are required, i. The securities market is an intermediary between investors and issuers of securities.
In the market there are various types of transactions withsecurities. All operations are carried out by several large groups of market participants. Firstly, these are the operators that carry out securities purchase and sale transactions. Secondly, these are the organizers, who are responsible for the quality work of trading platforms. Thirdly, these are banks, depositories, clearing organizations, etc., which take account of mutual obligations. Fourthly, these are registrars who make entries in the registers of shareholders about the owners of the Central Bank.
The security begins its journey on the Primarymarket, where it is initially placed. The first investor who bought a security has the right to resell it, exchange it, etc. The dealer who bought the paper sells it at a market price.
Subsequently, the paper enters the secondary market,where all subsequent operations occur. In this market, there is a redistribution of resources among investors. Here, operations are conducted by dealers and brokers. Dealers work for themselves, and brokers fulfill customers' orders. Clearing companies are responsible for accounting for mutual transactions between them. Money is transferred by banks, securities are transferred from the seller to the buyer. Registrars fix the ownership of new customers in the registers. This is the simplest scheme of transactions, which usually takes place on the securities market.