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УДК 336.76
ПРИРОДА ФОНДОВОГО РЫНКА
© 2020 И.А. Сорочайкин, А.А. Сорочайкина*
В статье анализируется структура фондового рынка, его природа, функции, а также место в финансовой системе. Дана характеристика основных структурных элементов и участников рынка ценных бумаг и их взаимодействия на фондовой бирже. Описаны ведущие мировые фондовые биржи.
Ключевые слова: фондовый рынок, ценные бумаги, фондовая биржа, участники рынка.
The stock market is apart of the financial market, as a product in which act securities. The stock market can also be defined as the set of economic relations between the participants in the issuance and circulation of securities. In economic science and practice, the terms "securities market" and "equity market" are used as synonyms for the stock market. Further, we will use all the terms as equivalents.
One of the main missions of the securities market is to ensure a flexible cross-sectoral reallocation of investment resources and to ensure the maximum possible flow of domestic and foreign investment, to create the necessary conditions for stimulating savings transformation into investment. The securities market creates opportunities to integrate capital borrowers and investors. The result is a system with the help of which borrowers can borrow through issuing a wide range of equity instruments and through consolidation the investment resources of different investors.
The stock market performs several important functions, which can be divided into two groups -general and specific functions. We will start with general market functions:
1. Commercial or business function (profiting from early investment);
2. Price or measurement function (market price formation);
3. Information function (information on the stock market must be as transparent and accessible as possible to all market participants);
4. Regulatory function (the market creates the rules of trade and the procedure for resolving disputes between participants).
Specific functions differentiate the stock market from others, so these functions are unique to this market:
- redistributive function, which is realized in the distribution of money between branches and spheres of the economy, the transfer of savings (mainly of the population) into a productive form, and the financing of the State budget on an inflationary basis. This function provides funding for areas of business where maximum income from activities is most likely to be generated. It should be noted that due to this function money is transformed into real investment flows that are capable of maximizing the financial performance in different sectors.
- price and financial risk insurance (hedging) function, which is implemented through futures and options contracts.
- accounting functionis reflected in the obligatory recording of securities that are publicly traded. The registration of professional participants in the stock market is also carried out through the licensing and recording of stock transactions, sales contracts, collateral, trust, conversion on the stock exchange.
- function of influencing on a countrys monetary circulation is to regulate the amount of money in circulation throughtimely issuance and repayment of government securities.
- function of stock market stimulation is to motivate alllegal and natural persons to become participants in the market, to buy and sell securities, to collect from its income. The more the market participants, the higher the income [1].
Regarding the lace of the stock market in the financial system, it should first be noted that the financial market of any country consists of the money market and the capital market. The division of the financial market is determined by the special nature of the circulation of financial resources, which serve operating capital and fixed capital. The
* Сорочайкин Иван Андреевич - аспирант; Сорочайкина Анна Андреевна (anyutka99@gmail.com) -cтудентка; оба - Самарский государственный экономический университет (Самара, РФ).
Capital market
Money market Stock market
Pic. 1. The structure of the financial market
money market includes funds that facilitate the movement of short-term loans (up to one year).Long-term savings (more than one year) are carried on the capital market. The securities market serves both the money and capital markets. It is noteworthy of mention that securities serve only part of the flow of financial recourses. Picture 1 shows the position of the stock market in the structure of the financial market.
The financial market is represented by a large circle, which is divided into two parts: the capital market and the money market. Inside the financial market there is a stock market (a small circle) [2, p. 95].
The role of the securities market is reflected in its results for the economy, the population and
the government. The main role of the market can be described as an impact on the socio-economic development of the country: ensuring the continuation of the capital cycle by attracting funds that are freely traded in the form of investments due to the companies development; providing multiple investment instruments with different terms and conditions (including sales of stocks, bonds, Eurobonds, warrants, etc.); facilitating the payment and monetary circulation (bill, cheque), the redistribution and economical use of material and monetary resources, increasing the effective demand of the population, covering the federal budget deficit and developing foreign economic relations.
Characterization of the stock market s main structure
The components of the stock market are not based on a particular type of security, but on the manner of trading in a given market. The following markets can be identified within the securities market (picture 2).
Pic. 2. The components of the stock market
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The types of the stock market can be depending on the time and method of issuance of securities:
- Primary market is the market in which securities are issued and placed.
- Secondary market is a market in which previously issued securities are traded or transferred from one owner to another for the duration of the security s existence.
According to the level of organization, there are organized and unorganized markets.
- Organized market - circulation of securities on the basis of firmly established rules between professional market participants.
According to the type of transaction:
- Cash market (or spot market) is the market with immediate realization of transactions within 1-2 working days, not counting the day of conclusion of the transaction.
- Forward market is a market in which transactions are concluded with a duration of more than two working days.
It is also possible to classify the stock market by territorial principle into international, regional, national and local.
Historically, there have been three conditional stock market models:
Characterisation of the model Countries
Non-bank model The intermediaries are non-bank securities companies. The feature of such market model is the active inflow of private equity investments and the division of the single capital into parts. USA, UK, Canada (~40% of the world)
Bank model The intermediaries are banks. In this variantmonopoly owners of large shares dominate the stock market, and a significant segment is held by debt obligations. Germany, France, Austria, Switzerland, Belgium (~10% of the world)
Mixed model The intermediaries are both banks and non-bank organizations. Japan, Russia (~50% of the world)
- Unorganized market - circulation of securities without the compulsory rules for all market participants. These markets are practically non-existent at the moment.
Types of securities markets, depending on the place of trade:
- Stock exchange with the brokerage and dealer firms that operate on it. The stock exchange is always organized.
- The over-the-counter market deals in the securities of those joint-stock companies that do not have enough shares or profits to register their shares in the stock exchange and be allowed to bid on it. The over-the-counter market can be organized and unorganized ("street").
The following types of stock marketare identified by method of trade:
- Traditional market. There is a physical place (traditional exchange) where buyer and seller meet and conclude transactions.
- Computerized market. Trade in such markets is conducted through computer networks of the relevant fund intermediaries. Direct contact between seller and buyer in this case is often absent. The trade and its servicing process is being fully automated, so that the role of market participants is largely confined to entering their bid for the sale of securities into the tendering system.
Any stock market consists of the following components:
- market players;
- regulators and government agencies;
- self-regulating organizations (associations of professional participants in the securities market, which perform certain regulatory functions);
- market infrastructure:
• law;
• information (financial press, fund indicator systems, etc.);
• depository and clearing network (separate depository and clearing systems often exist for public and private paper);
• registration network.
Notice picture 3, which shows the participants of the securities market.
State control authorities may include any State organs and institutions performing the functions of controller, securities regulator. In the Russian Federation it was formerly the Federal Financial Markets Service, which was abolished in 2013 and replaced by the Bank of Russias Financial Market Service. The Ministry of Finance of the Russian Federation is another regulator and controller on behalf of the State as well as a direct participant in the securities market.
Public regulatory organs include self-regulating organizations such as:
Pic. 3. The stock market participants
- The National Association of Stock Market Participants (NAUFOR), consisting mainly of brokerage, dealer and management companies. Established in 1995. In March 2020, NAUFOR has 441 full and 13 associate members [3].
- Professional Association of Registrars, Transfer Agents and Depositories (PARTAD) unites professional participants of the securities market in Russia. It was established in 1994.
Intermarket actors are individuals who operate in several markets at the same time. These include investment groups that invest in different segments of financial markets. Information, consulting, rating agencies and other professional agencies that provide the necessary services to participants in multiple markets can also be included in the term "the intermarket participants".
Internal market participants are persons (both natural and legal) who operate only in the securities market. There are not so many these market participants in practice. These are primarily index, bond and similarmutual funds.
Professional and non-professional participants can be identified among internal market participants.
Professional participants are people who carry out professional activities, as evidenced by the license granted to them for certain activities. The absence of a license deprives a person of a "professional participant" status. Professional market participants include brokerage and dealer companies, management organizations, depositories, registrars, traders.
Non-professional market participants are primarily issuers and any investors who work on the stock market. They also include private investors who do not have a special license issued by the Central Bank.
Professional participants in the securities market can be conditionally divided into professional sellers and infrastructure organizations.
Professional sellers provide services for the conclusion of sales transactions on the securities market:
- brokers are organizations that register into securities purchases for their customers and at the expense of their customers;
- dealers are organizations whose main activity is the sale of securities on their own behalf and at their own expense;
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Depositary/custody account
Buyer's broker
(^Shares enrolment
Stock Exchange
Í Writing off shares
Depositary/custody account
Seller's broker
Pic. 4. The process of buying/selling shares on the stock exchange
- management companies are organizations that trust deed securities and money invested in them by customers.
Infrastructure organizations are professional participants in the securities market who service the processes of conclusion and execution of market transactions or service any process of securities ownership change. These include the following:
- registrars are organizations whose task is to maintain lists (registers) of securities owners;
- depositories are organizations that store and account securities held by market participants;
- clearing organizations are organizations providing settlement services to securities market par-
ticipants. The essence of their activities can be defined as the accounting of cross-indertakings;
- traders are organizations that create the necessary conditions for concluding transactions on the stock market.
Thus, there are seven types of professional activity on the Russian securities market, but the number of professional participants in the market itself can be measured by hundreds of organizations [4].
Picture 4 provides a schematic representation of the interactionof the listed before participants on the stock exchange.
Examine some of the major stock exchanges in detail [5].
Name of the stock exchange and date of establishment Companies and indices Market capitalization on September 2019
New York Stock Exchange (NYSE). It was founded in 1817 and named in 1963. There are more than 2,400 registered companies of such various sectorsas finance, health, consumer goods and energy. Among the best known are Exxon Mobil Corp (XOM), Citigroup Inc (C) and Pfizer Inc (GE). The Dow Jones Index (DJI) is most commonly used to track the value of NYSE shares, but some shares are also included in the NASDAQ index. $32 trillion (it is about 40% of the total stock price)
National Association of Securities Dealers Automated Quotation (NASDAQ) The year of foundation is 1971. NASDAQ's top corporations are Apple (APPL), Microsoft (MSFT), Facebook (FB) and Tesla (TSLA). The index used to measure its effectiveness is called Nasdaq 100. $12 trillion
Tokyo Stock Exchange (TSE) The year of foundation is 1878. To date, more than 3,575 companies have been registered with TSE. The index used to measure its effectiveness is Nikkei 225, which includes the leading Japanese corporations: Honda Motor Co, Toyota Motor Corp, Sony Corp andgpyrae. $6 trillion
Shanghai Stock Exchange (SSE) Works stable since 1990 (history dates back to 1866) The SSE Composite Index, also known as the Shanghai Composite Index, tracks the shares of major Chinese enterprises such as Petrochina, the China Industrial and Trade Bank and the China Agricultural Bank. $5 trillion
End of the table
Name of the stock exchange and date of establishment Companies and indices Market capitalization on September 2019
Hong Kong Stock Exchange(SEHK) established in 1891 The SEHK has a stock of 1,955 shares, but most of the capitalization is accounted by the top-20 corporations, which include AIA, Tencent Holdings and HSBC Holdings. $4.46 trillion
London Stock Exchange (LSE). Founded in1801 (history dates back to 1698) Traders can track the dynamics using the index FTSE 100, which is published by the newspaper «Financial Times». The index includes 100 leading companies listed on the LSE, including Barclays, BP and GlaxoSmithKline. It also uses other indices, such as FTSE 250, FTSE Small Cap, and FTSE All-share. $4.38 trillion
Euronext (based in Amsterdam) Established in 2000. Trading is conducted only in the euro currency. 1300 corporations and 30 stock indices. The main index is the Euronext 100, which consists of the largest and most liquid stocks traded in Europe, including AXA, Christian Dior, and Renault. $4.36 trillion
Shenzhen Stock Exchange (SZSE). Trading started in 1990 SZSE trades in Chinese yuan shares, as the listed companies are mainly based in China. SZSE is also considered to be the headquarters of the SME Board of Directors, established in 2004 for the development of the production sector. $3.49 trillion
Toronto Stock Exchange (TSX). The year of foundation is 1852. More than 1,500 companies, the most successful among them are Royal Bank of Canada and Suncor Energy Inc. The top 100 companies on TSX use the combined S&P/TSX index, which accounts for about 70% of Toronto's market capitalization. $2.29 trillion
Frankfurt Stock Exchange (FWB) was founded in 1585 The index used to measure its effectiveness is DAX - the index of «blue chips», the top-30 corporations included in this stock exchange. This includes companies such as Adidas, BMW and E.ON. $2.22 trillion
Bibliographic list
1. URL: https://spravochnick.ru/ekonomika/ torgovlya_na_fondovom_rynke/ osobennosti_i_funkcii_fondovogo_rynka/
2. Рынок ценных бумаг : учебник / под общей ред. Н.И. Берзона. - М.: Изд-во Юрайт, 2011. - 531 с.
3. Information taken from the official website NAUFOR. URL: www.naufor.ru/
4. Галанов В.А. Рынок ценных бумаг: учебник. - М.: ИНФРА-М, 2007. - 379 с.
5. URL: https://ffin.ua/ru/blog/articles/ investopediia/post/reitynh-birzh-za-kapitalizatsiieiu and https: //bcs-express.ru/novosti-i-analitika/top-10-mirovykh-birzh
Поступила в редакцию 05.06.2020 г.
Economy, Governance and Law Basis
№ 3 (22)
THE NATURE OF THE STOCK MARKET
© 2020 I.A. Sorochaikin, A.A. Sorochaikina*
The article analyses the structure of the stock market, its nature, functions as well as its place in the financial system. Given the characterization of the main structural elements and participants of the securities market and their cooperation on the stock exchange. The worlds leading stock exchanges are described.
Keywords: stock market, securities, stock exchange, market players.
Received for publication on 05.06.2020
* Sorochaikin Ivan A. - postgraduate; Sorochaikina Anna A. (anyutka99@gmail.com) - BA Student, Faculty of International Economics; both - Samara State University of Economics (Samara, Russia)
