Stock market - detailed review and reviews
Why do we need the stock market?
What is the purpose of stock trading market? The most complex mechanism of its work allows the redistribution of securities between different "institutions": large investors-owners of companies, and private Internet traders. However, the stock market (what is it?), as we often know it, is a secondary market (there is also a primary market - in this case, it provides the relationship between the institutions "state" and "commercial structures"), which allows an interested private person to own securities. The greater the number of such private investors in the market, the better a country's economy functions, having the necessary volume of funds to solve its problems.
Turning to stock exchangeBoth the individual and the large investor are interested in income through the turnover of securities. Transactions take place without direct participation of both parties or counterparties, their execution is guaranteed by the exchange itself, which makes the relationship reliable. For the investor it serves as a convenient and safe place to conduct various manipulations with securities assets.
Functions of the stock market
Bidding organization functions:
Trading on the stock market is a fairly large amount of work, invisible to its participants, but it is the performance of specific functions that allows the market to operate without disruption in automatic mode, and all transactions take place instantly.
To do this, the following points must be met:
- Organization of the bidding process (even if it is an electronic exchange);
- Creating conditions for the implementation of transactions by investors, financial intermediaries, the so-called intermediary function;
- Conducting asset valuations, the so-called indicative function;
- Organization of the full process of securities trading, the so-called regulatory function;
- Ensuring the liquidity of assets (which will allow for quick major asset transactions due to a clearly established tariff policy).
Regulatory functions, which make it possible to obtain important information from the market, such as that needed by the state to carry out the full activities of the economic sphere. In addition, the exchange monitors the market to stop price manipulation, manipulation of documents, violations of private persons and brokers.
How the stock market works
As is known, a large number of people work at the stock exchange, which allows it to function efficiently and smoothly. Describing its structure, we should start with the papers needed to launch the whole mechanism. Securities are issued by issuers, which have the right to issue (otherwise - to put into circulation) assets (traveler's checks, credit cards, money) and have certain obligations to the owners of the assets, money, cards (inf. Wikipedia).
Also, under the law, the right to issue shares may be used by various commercial organizations that are necessarily joint stock companies (stock exchanges, limited liability companies, credit companies, etc.), other legal entities do not have the right to issue shares, according to zerich.com.
As soon as a share is issued, those participants who provide turnover (this is the exchange, where assets are bought and sold by traders, investors, companies) get involved in the process; there are also professionals from depositories and clearing organizations who conduct all kinds of settlements.
Separately, let us note here stockbrokers, dealers and management companies, which provide access to the entire range of financial assets for those who come to the market to make money. One of the main groups of participants for whom the infrastructure of trading terminals, online trading, is created is investors and traders (it can be the government, the public, commercial companies) who use the market to buy securities to own or resell.
The stock market is based on the stock exchange, through which transactions are carried out with registered (quoted) instruments (assets, documents). The stock exchange provides the platform and the necessary infrastructure for stock trading, acting as a high-tech organization responsible for the latest high-speed software, uninterrupted operation of servers, secure equipment, which makes it possible to connect millions of interested buyers and sellers through the Internet, to provide them with the opportunity to make online transactions and 24-hour access to statistics.
All this helps the exchange maintain its serious strategic function - in supporting the liquidity of the market, which is characterized by a large number of transactions, trading turnovers that drive the price. If the market has low liquidity, it leads to tensions among securities traders and negative sentiments. To avoid that, the work of the exchange is controlled, subject to strict rules and regulations. Owners of the exchange are forbidden to receive income from trading assets on it, the exchange earnings are based on commissions, and, with high liquidity, it has a good income.
Participants of trading on the stock market
- Those who create and issue shares (government, companies),
- Those who control the movement of shares (market makers; clearing; the depository center),
- Those who are licensed to sell assets on the exchange (stockbrokers, management companies, dealers, etc.),
- Those who ensure the circulation of assets (buyers, sellers),
- The overall regulator of this process.
- 4 June 2018 в 18:02