Financial market models and their features
Financial market structure
The essence of the financial market and its role in the economy
Financial market and its importance in economic development (2 hours)
The effective functioning of the economy of any state in modern conditions is impossible without a developed financial market.
Financial market- a rather complex and multifaceted economic category associated with various processes taking place in the economy. This predetermines the ambiguity of opinions about the essence, structure and functions of the financial market.
In economic literature financial market v broad sense characterized as an organizationally formalized economic space where the sale and purchase of financial resources, instruments and services is carried out. V narrow sense the financial market is defined as a set of economic relations that ensure the mobilization and redistribution of temporarily free funds, financial resources, the circulation of securities between market entities.
The economic basis of the financial market is made up of various forms of capital (monetary, loan, fictitious), interconnected. Money capital, this is the capital of the real sector of the economy (industries, services and trade), which is used in the form of production assets that create income in monetary form (in other words, money capital). The surplus of money capital accumulates and can be lent (loan), i.e. money capital is transformed into loan capital. The loan capital market is formed by special financial and credit institutions. O fictitious capital we can say when investors acquire various securities that have their own value and the ability to buy and sell, thereby fictitious increasing or decreasing the investor's capital.
Each form of capital has a different functional purpose and influences the formation of the structure of the financial market. The financial market provides the movement of securities, credit resources and monetary funds that act objects of relations in this market. Subjects of relations are the state, enterprises (organizations) of various forms of ownership, individual citizens.
The financial market plays an important role not only in the reproduction process, ensuring the free movement of funds of enterprises (organizations), but also in the organization of public finances. The financial market is seeking funds to cover the budget deficit in a non-inflationary way.
Thus, the financial market accumulates temporarily free capital from a variety of sources, efficiently distributes it between numerous consumers, directs to the most effective areas, accelerates capital turnover and contributes to economic development.
Depending on the volume and nature of transactions, financial markets can be divided into national, regional and international.
National financial markets ensure the movement of cash flows within the country and the relationship with world financial centers. The subjects of the national economy conduct transactions in these markets.
Regional financial markets serve a specific area. The countries of this region coordinate monetary and credit policy, create regional financial and monetary organizations.
International financial markets serve the intercountry movement of capital, implementing a system of financial, currency and credit relations between individual states, corporations of different countries, residents and non-residents. The world financial centers were formed, where the largest exchanges and banks, specialized credit and financial institutions were concentrated.
Main functions financial market are:
Active mobilization of temporarily free capital from various sources.
Determination of the most effective areas for the use of capital in the investment field. A specific pricing system for various financial market instruments identifies the most effective areas and directions of investment flows, ensuring a high level of return on capital used;
Effective redistribution of the accumulated free capital between its numerous consumers.
Acceleration of capital turnover, contributing to the activation of economic processes, the formation of a rational structure of the economy.
Formation of market prices for financial assets and services that most objectively reflect the emerging ratio of supply and demand for them;
Implementation of qualified mediation between buyers and sellers of financial assets through special financial institutions, which helps to accelerate cash and commodity flows, reduce social costs;
Creation of conditions for financial market participants to reduce various types of risks. The financial market has its own instruments and mechanisms to protect against unfavorable changes in market conditions, investment risks, technical and other types of risk.
Financial market participants functional characteristics can be subdivided into groups.
1. Major contributors- sellers and buyers of financial assets (currency values, credit resources, securities). The sellers in the financial market are lenders, issuers of securities and sellers of currency, and buyers are borrowers (borrowers), investors and buyers of currency.
2. Financial intermediaries... This group is represented by various financial, credit and investment institutions, the main of which are banks, investment companies and funds, trust companies, investment dealers and brokers.
Financial intermediaries, being professional participants in the financial market, bring buyers and sellers of financial assets together, thereby facilitating access to it for non-professional investors. In this case, one can single out brokers - intermediaries who carry out transactions at the expense and on behalf of the client, charging a commission, the amount of which, as a rule, depends on the amount and efficiency of the transaction, as well as dealers - intermediaries who carry out transactions at their own expense and on their own behalf and profit from the difference in the sale and purchase prices of financial assets.
3. Organizations serving the financial market. They are represented by numerous subjects of its infrastructure: stock and currency exchanges, settlement and clearing organizations, consulting firms, rating agencies, etc. All these organizations are not directly involved in investment, transactions with financial assets, but influence it by creating conditions for the effective operation of other financial market participants, providing settlement services, storing securities, collecting, analyzing and disseminating information.
4. State regulatory and self-regulatory bodies in the financial market. Since the development of the financial market is one of the directions of the financial and monetary policy of the state, the state regulates and controls the activities of entities in the financial market, contributes to the creation of the necessary regulatory and legal framework, a system of information about the state of the market and ensures its openness for participants, monitors stability and security of the financial market, etc. In addition, the state acts as a major participant in the financial market, using various financial instruments for monetary regulation.
Currently, the main regulation and supervision in the Belarusian financial market is carried out by the National Bank and the Ministry of Finance of the Republic of Belarus.
The financial market is an integral part of a developed market economy. Perhaps we can assume that the development of the financial market and the degree of its regulation by the state are the most important indicators of the level of maturity of the country's economic development.
The financial market is the most important segment of the stock market, which includes the financial market, money market, loan capital market and foreign exchange market. Of course, the financial market works in the stock market system as a whole and is influenced not only by internal factors of the country's economic and political situation, but also by the state of the world financial market.
The functioning of the financial market in a market economy is extremely important in the self-regulation of the economy. In a developed state, the financial market performs at least the following most important functions in the economy:
the stock market is a field where financial instruments are used to mobilize savings in the economy and convert them into investment resources directed to the most effective measures of economic development;
by means of the financial market, capital is transferred from one spheres of the economy to others, due to which structural changes in the economy are carried out in accordance with new conditions of demand. The development of the financial market as a part of the stock market and its skillful regulation by the state largely predetermine the mobility of the economy, its ability to adapt to new conditions;
the development of the financial market largely determines the degree of flexibility of the institutional structure of the economy, since shares and other securities are used to build a system of dependence, participate in related economic and financial entities, and form holdings of various levels and degrees of dependence;
the financial market plays an important role in increasing the level of liquidity of financial enterprises, their solvency, since their portfolio maintains a guaranteed share of liquid securities;
the financial market, directly its stock sector and, in particular, the exchange sector, serve as a subtle barometer of the situation in the economy, changes in business activity and trust both in general and in individual enterprises. This applies to both operational and strategic information.
BANK - (from Italian banco - bench) - a financial organization, an institution that produces various types of transactions with money and securities and provides financial services to the government, businesses, citizens and each other. Banks issue, store, lend, buy and sell, exchange money and securities, control the flow of funds, the circulation of money and securities, and provide payment and settlement services. There are two main types of banks, which together form a two-tier system: a) the central bank - the main state bank of the country, endowed with special rights. The central bank is called upon to regulate money circulation in the country, to issue money, to regulate credit and exchange rates, to control the activities of commercial banks, to store reserves and stocks of money and gold. The central bank is called the "bank of banks"; b) commercial banks - most often non-state banks, performing a wide range of banking operations, serving mainly enterprises, firms, organizations, institutions and providing banking services to the population. The main functions of commercial banks are accepting deposits (deposits) and providing loans, maintaining accounts, making non-cash payments, paying out money on deposits, buying and selling securities, currency, and providing services. Commercial banks can be universal and specialized (savings, investment, mortgage, clearing, etc.).
The functioning of the financial market.
So, issuers issue securities. If the securities are registered, then registrars are created to record the rights of the owners of these securities. Operations with securities in the organized and unorganized financial market are carried out by professional stock intermediaries (brokers and dealers). An organized stock market presupposes the obligatory presence of trade organizers (financial exchanges and an over-the-counter organizer and a whole range of other infrastructure elements).
Thus, the life cycle of a security consists of the following phases:
- -designing a new issue of securities;
- -primary placement of securities (primary issue);
- - circulation (purchase and sale) of securities;
- - redemption (redemption) of debt (bonds, etc.) securities.
In accordance with this cycle, two fundamental components of the financial market are considered, i.e. its primary and secondary segment.
The primary market is the market where the placement of the first issued securities is carried out. Its main participants are issuers of securities and investors. Issuers needing financial resources to invest in fixed working capital determines the supply of securities on the stock market. Investors looking for a profitable area to use their capital create a 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. Therefore, we can conclude that in the primary market there is a distribution of free funds by industry and spheres of the national economy. The criterion for this placement in a market economy is the income generated by securities. This means that free funds are directed to enterprises, industries and sectors 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, maintains the proportionality of the economy at the current level of profit for individual enterprises and industries.
All this means that the primary financial 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 an economy that meets the criterion of maximizing profits, and thus determines the pace, scale and efficiency of the national economy. The primary market assumes the placement of new issues of securities by issuers. In this case, corporations, the federal government, municipalities can act as issuers.
Buyers of securities are individual and institutional investors. At the same time, the ratio 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, institutional investors dominate the securities market. These are commercial banks, pension funds, insurance companies, investment funds, mutual funds, etc.
After analyzing the state of financial markets in developed countries, it can be noted that although the primary market serves as the basis of the financial market, and it is this market that determines its overall scale and rate of development, its volume in developed capitalist countries is currently relatively small.
In some countries, the ratio between equity and borrowed capital is established by law. However, regardless of the existence of the law, each country has a clear idea of the limit for the amount of borrowed funds. Going beyond this line is associated with significant risk for the company as a whole and its shareholders. In this situation, the corporation regulates the structure of its capital by issuing new shares, replacing their debt obligations.
Thus, the issue of new shares at the present stage of development of the financial market in developed countries is very insignificant and is not always associated with the mobilization of free cash resources to finance the economy. This means that in developed countries there is not only a decrease in the scale of the primary financial market, but in parallel there is a decrease in its role as a regulator of investments and the economy as a whole.
In Russia, the financial market is at the stage of its formation. In the conditions of massive corporatization of state-owned enterprises, the creation of new joint-stock structures that are in dire need of funds for investment, constant borrowing of funds by the state, the primary market is the main segment of the securities market.
However, due to the weak development of market relations, inflation, general instability, the primary market in Russia today does not perform the functions of regulating the economy.
Placement of securities on the primary market is carried out in two forms:
- 1. by direct contact with investors;
- 2. through intermediaries.
Regardless of the form of placement of securities - by direct appeal to investors or through an intermediary - the preparation of a new issue includes a number of stages (1, p. 122):
I. Registration of the issue by a specially authorized government agency.
II. Cooling down period. During this period, the application is verified. The issuer uses it to publish preliminary issue prospectuses, which provide the necessary information to assess the attractiveness of the issue.
III. The Pre-Issue Meeting phase where the registration application is reconciled and the final prospectus is determined.
IV. The period of immediate implementation of new releases.
The primary market implies the obligatory existence of a secondary market. Moreover, in my opinion, the existence of a primary market in the absence of a secondary market is practically impossible.
Secondary market is a market in which securities are circulated in the form of resale of previously issued 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 is reduced to the constant purchase and sale of securities. Buy cheaper and sell higher is the main motive of their activities.
The secondary market necessarily carries an element of speculation. As a result, there is a constant redistribution of property in the secondary market, which always has one direction - from small owners to large ones.
Capital migration is carried out in the form of its overflow to the place of the necessary application and capital outflow from those industries and enterprises where there is a surplus.
Thus, the secondary market, unlike the primary one, does not affect the size of investments and savings in the country. It provides only a constant redistribution of funds already accumulated through the primary market between various subjects of economic life. As a result, the functioning of the secondary market provides a constant restructuring of the economy in order to increase its market efficiency and is just as necessary for the existence of the financial 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 thus creates favorable conditions for their initial placement. The ability at any time to turn securities into the form of cash is a prerequisite for investing in securities, because the source of the invested loan capital is temporarily free money capital and funds that can be used only in accordance with the basic principles of credit.
The possibility of resale is the most important factor that an investor considers when purchasing securities on the primary market. The function of the secondary market is to balance the financial market and provide liquidity. A liquid market is characterized by a small gap between the seller's price and the buyer's price; small price fluctuations from transaction to transaction. Moreover, I concluded that the more market liquidity is, the greater 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.
There are two organizational types of secondary markets: organized - exchange-traded and unorganized - over-the-counter. In turn, both of them take various forms of organization.
The simplest form of organizing financial trade is a spontaneous 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. The conclusion of a transaction in a spontaneous market depends on how well the chance brings sellers and buyers together, and the conditions for performing different trading operations can differ significantly even when they occur at the same moment.
OTC turnover emerges as an alternative to the exchange. Many companies could not enter the exchange, as their indicators did not meet the requirements for their registration on the exchange. At present, the over-the-counter circulation is dominated by the overwhelming majority of all securities. These are shares of small firms operating in traditional industries, shares of large companies established in the newest sectors of the economy, potentially capable of becoming major corporations, securities of credit institutions that traditionally restrict the circulation of their securities, government and municipal securities, new issues of shares.
OTC trading is carried out by specialists: brokerage and dealer companies, often combining their functions. In the over-the-counter circulation, there is no single physical center for performing operations, and sales and purchases are carried out through telephone and computer networks. Prices are set through negotiations, according to the rules governing over-the-counter turnover, which are always less stringent than the trading rules in force on the exchange.
As you know, in Russia, the Russian Trading System (RTS), which unites broker-dealer companies in the central region and the north-west, serves as the organized center of over-the-counter turnover.
The traditional form of the secondary market is the financial exchange - an organized, regularly functioning market for securities and other financial instruments, one of the regulators of the financial market, serving the movement of money capital.
The role of the financial exchange in the country's economy is determined primarily by the degree of privatization of property, 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 financial market as a whole.
The main functions of a financial exchange include (1, p. 127):
mobilization and concentration of free cash capital and savings by organizing the sale of securities;
investment by the state and other economic organizations by organizing the purchase of their securities;
ensuring a high level of liquidity of investments in securities.
In order for securities to circulate on the financial exchange, they must overcome a number of barriers: listing commission (the procedure for including an issuer's securities in the exchange's quotation list); quotation commission (determines the price of a security when it is first sold).
As a result, after analyzing the above information, we can conclude that the financial exchange allows to ensure the concentration of demand and supply of securities, their balance through exchange pricing, which really reflects the level of efficiency of the functioning of the share capital.
Introduction
1. Financial market: essence and functions
2. The structure of the financial market. Characteristics of its elements
3. The role of the financial market in the development of the economy of modern Russia
Conclusion
Introduction
It is known that the economic basis of any state is the movement of funds between economic entities. Each economic entity has its own rights, goals, tasks and responsibilities, but they are all participants in economic relations. Interacting with each other, these economic relations form the market. The functioning of any market is mediated by cash flows and is associated mainly with the relationships that arise in the process of cash flow.
Unfortunately, for many decades in Russia, in essence, there was neither a financial market nor its infrastructure: private commercial and investment banks, stock exchanges, insurance companies, etc. Russia's transition from a rigidly centralized planned economy to a market economy requires the re-creation of a financial market in the country with all the institutions serving it. This task is very complex and large-scale, but it needs to be solved immediately.
For many years, there was no competition in the country between producers of goods and services, including financial ones, which, as you know, is the engine of social progress. As a result, during the existence of the "planned economy" the volume and structure of social production were separated from the volume and structure of socially necessary needs of the population. As a result, a "deficit economy" was formed, which gave rise to a shortage of not only material, but also spiritual benefits. The transition to new, market-based methods of management has become an objective necessity.
A market economy requires the use of the potential of the financial market, which is the most important source of its growth. The scale of the financial market depends on the state and size of social production, the size of the active population. The largest resources are now possessed by the financial markets of the USA, the European Union countries and Japan. It is hoped that the financial market of Russia, when the transitional period of its development ends, will also have sufficient resources for it.
The relevance of this topic lies in the fact that all links of the financial system operate in a single market space, the most important element of which is the financial market. The purpose of this market is the accumulation of temporarily free funds and their effective use.
The purpose of this work is to reveal the essence of the financial market and its role in the economy.
Based on this goal, the main tasks of the work are:
Expand the concept and functions of the financial market;
Consider the structure of the financial market and its elements;
Determine the role of the financial market in the development of the economy.
In carrying out this work, the legislative and regulatory materials of the Russian Federation, the works of domestic and foreign experts on the problem, as well as statistical sources, periodicals and electronic resources were studied and used.
1. Financial market: essence and functions
The financial market is the sphere of the sale of financial assets and economic relations between buyers and sellers of these assets. The financial activity of enterprises is inextricably linked with the functioning of the financial market, the development of its types and segments, the state of its conjuncture. In its most general form, the financial market is a market in which a variety of financial instruments and financial services are the objects of purchase and sale.
The concept of "financial market" is to a certain extent collective, generalized. In real practice, it characterizes an extensive system of separate types of financial markets with various segments of each of these types, which are interconnected.
Of course, the financial market is one of the most important structural components of the market as a whole. Therefore, this concept is subject to the uncertainty that is inherent in the definition of the market as such. Now there is no unified understanding of the essence of the financial market, its structure, which means that there is no generally accepted understanding of it.
Definitions of the financial market range from the most general to specific ones, tied to a specific phenomenon, and therefore narrowing the scope of the concept.
Most authors believe that the essence of the financial market lies in the totality of economic relations and institutions serving them, ensuring the transformation of money into capital through financial instruments.
Like any other, the financial market is designed to establish direct contacts between buyers and sellers of financial resources. The financial market is a fairly complex structure that combines various types of markets, each of which has its own segments.
To reveal the essence of the financial market, we will characterize its components. The analysis of the functioning of financial markets presupposes its certain segmentation, division, and the selection of separate markets functioning according to their own rules. There are different approaches to the classification of financial markets.
Classification - by the period of circulation of financial assets (instruments). The following types of financial markets are distinguished: the money market and the capital market.
On the money market, market financial instruments and financial services of all previously considered types of financial markets with a circulation period of up to one year are sold and bought. The functioning of this short-term sector of financial markets allows enterprises to solve the problems of both replenishing the lack of monetary assets to ensure current solvency, and the effective use of their temporarily free balance. Financial assets circulating in the money market are the most liquid; they have the lowest level of financial risk, and the pricing system for them is relatively simple.
On the capital market, transactions are carried out in the same way, only with a circulation period of more than one year. The functioning of the capital market allows enterprises to solve the problems of both the formation of investment resources for the implementation of real investment projects, and effective financial investment (making long-term financial investments). Financial assets traded on the capital market, as a rule, are less liquid, they are characterized by the highest level of financial risk and, accordingly, a higher level of profitability.
The classification of financial markets can also be carried out on a regional basis (Table 1.1).
Table 1.1. Regional classification of financial markets
| Financial market type | Specific traits |
| Local | represented mainly by operations of commercial banks, insurance companies, unorganized securities traders with their counterparties - local economic entities and the population; |
| Regional | characterizes the financial market operating on the scale of the region (republic) and, along with local unorganized markets, includes a system of regional stock and currency exchanges: |
| National | includes the entire system of the country's financial markets, all their types and organizational forms; |
| World | is an integral part of the global financial system, which integrates the national financial markets of countries with open economies. |
The main classification of the financial market is by types of traded financial assets (instruments, services). The following components of the financial market are distinguished (Figure 1.1):
Credit market;
Securities market (or stock market);
Currency market;
Insurance market;
Precious Metals Market.
The credit market is a general designation of those markets where there is supply and demand for various means of payment. Credit transactions are mediated, as a rule, by credit institutions (banks and others), which borrow and lend money, or the movement of various debt obligations that are bought and sold on the securities market. Consequently, the credit market provides funds for investment at the disposal of enterprises, and it is on it that money moves from those sectors of the economy where there is a surplus to those sectors that are experiencing a shortage of them. In the credit market, businesses borrow money to finance their investments; sometimes businesses lend money, but, as a rule, the manufacturing sector borrows more than it gives. Therefore, we can say that one of the main tasks of the credit market is to direct the savings of the population and free funds to intermediaries for investments.
The credit market promotes the growth of production and trade, the movement of capital within the country, the transformation of money savings into investment, the implementation of a scientific and technological revolution, and the renewal of fixed capital. The economic role of the credit market lies in its ability to pool small, disparate funds in the interests of all capitalist accumulation. This allows the market to actively influence the concentration and centralization of production and capital.
The securities market is a set of economic relations regarding the issue and circulation of securities as instruments of financing and economic development. Securities as an economic category are rights to resources that have become isolated from their basis and even have their own material form (for example, in the form of a paper certificate, account entries, etc.), as well as having the following fundamental properties: circulation; availability for civil circulation; standard and serial production; documentary; regulation and recognition by the state; marketability; liquidity; risk. ...
The mechanism of functioning of this market allows financial transactions to be carried out on it in the fastest way and at more fair prices than on other types of financial markets. This market is most amenable to financial engineering - the process of purposeful development of new financial instruments and new schemes for carrying out financial transactions.
The securities market is divided into primary and secondary. Primary markets are those in which issued securities are sold to buyers for the first time. Secondary markets trade already held securities. This distinction between the two is very important. If a newly issued share of a company is sold, then the issued funds are received by this company, and if a share issued and sold earlier is sold, then the issued funds go to its last owner. Secondary markets help corporations sell newly issued stocks or bonds, increasing their liquidity.
The stock market can be classified according to various criteria. Depending on the place of trade, there is an exchange and over-the-counter market. Accordingly, on the exchange-traded securities are sold on the exchange, and over-the-counter outside of it. Depending on the level of regulation, the market is divided into organized and unorganized. According to the timing of the execution of the transaction, there are cash (spot) and urgent. In the spot market, purchases and payments are made at the same time. In the derivatives market, the instruments are derivative securities, that is, not the securities themselves, but contracts for their purchase or sale in the future.
Depending on the type of securities, the stock market is subdivided into the market for equity, debt and derivative securities. Securities existing in modern world practice are divided into two classes: basic securities and derivative securities or derivatives.
The foreign exchange market is a market where transactions are made with currency or with financial instruments, which are based on currency. The successful development of foreign exchange relations is possible provided that there is a foreign exchange market where one can freely sell and buy foreign currency. Without such an opportunity, economic counterparties would not be able to realize their currency relations - they would not have foreign currency to fulfill their external obligations, could not turn the received foreign currency earnings into national money to fulfill their internal obligations.
In the foreign exchange market, they buy and sell currency not only for making payments, but also for other purposes: for speculative operations, hedging operations for currency risks, and others. Moreover, these operations are becoming more and more widespread.
According to its economic content, the foreign exchange market is a sector of the money market, which balances supply and demand for such a specific product as currency.
The insurance market characterizes the market in which the object of purchase and sale is insurance coverage in the form of various offered insurance products. The demand for the services of this market increases significantly with the development of market relations. The subjects of this market, which offer insurance protection, contribute to the accumulation and efficient redistribution of capital, making extensive use of the accumulated funds for investment purposes. Even in crisis economic conditions, this market is developing at a high rate, significantly exceeding the rate of development of other types of financial markets.
The prerequisites for the existence of the insurance market are the presence of a public need for insurance services and insurers capable of satisfying this need. In this regard, the market of the insurer and the market of the insured are distinguished.
On a sectoral basis, the market for personal, property and liability insurance is distinguished. In turn, each of the markets can be divided into separate segments, for example, the accident insurance market, the home property insurance market, and others.
In the precious metals market, transactions are carried out with precious metals, primarily gold. The versatility of the gold market is due to the fact that it is not only a generally recognized financial asset and the safest means of reserve funds, but also a valuable commodity for a number of manufacturing enterprises. In our country, the gold market is the least developed type of financial market due to the absence of even the minimum required legal regulation.
Gold market - a market that ensures the implementation of international settlements, industrial and household consumption, investments, risk insurance, speculative transactions.
The degree of organization distinguishes between exchange and over-the-counter gold markets. Gold is an object of exchange trading, along with other commodities and financial assets. The gold exchange market is an organized market represented by the exchanges of precious metals and precious stones. OTC gold markets are consortia of several banks authorized to transact in gold. Banks carry out intermediary transactions between buyers and sellers, fix the average market price level, and are also engaged in refining, storing gold, and manufacturing ingots.
The world centers include markets in London, Zurich, New York, Chicago. Internal free markets are markets in Paris, Vienna, Istanbul, Milan and others; not free (local, controlled) - in Athens and Cairo.
Unlike international markets with a small number of participants, domestic markets are more or less regulated by government. The means of regulation are economic measures - quotas, tariffs and taxes, intervention in pricing. Free domestic markets are more leniently regulated, usually through taxation methods. This policy does not formally prevent gold from moving from state to state. Regulated markets are more tightly controlled. Methods such as tax manipulation, licensing, direct intervention and pricing are applied to them.
Let's consider the functions performed by the financial market. The financial market consists of different segments, therefore, the functions of these different segments are also different. Moreover, all segments of this market also perform a number of functions that most generally reflect the essence of the financial market as a whole. These general market functions include the following:
Risk insurance.
Through the financial market, free money is accumulated, distributed and redistributed between sectors of the economy, countries and regions on a global scale; acceleration and growth of production efficiency. The financial market regulates relations between its participants, as well as monitors compliance with legislation, trade rules, ethical standards by its participants.
The financial market motivates legal entities and individuals to participate in it, by providing subjects with the right to participate in the management of enterprises, the right to receive income, the right to own property, the possibility of capital accumulation, thereby acting as a powerful stimulator of the investment process. The information function of the financial market is to bring market information about the objects of trade and its participants to the economic entities.
Thus, the national financial market consists of five fundamental segments: the credit market, the securities market, the foreign exchange market, the insurance market, and the precious metals market. In general, the financial market has a complex structure. The role of the financial market is very important, both in the development of a particular region and country, and in the development of the world economy as a whole.
2. The structure of the financial market. Characteristics of its elements
The term structure (from Latin structūra - structure) has a whole range of meanings found in both scientific and everyday vocabulary. Can be synonymous with system, form, model, organization.
In its basic meaning, structure is the internal structure of something. The internal structure is associated with the categories of the whole and its parts. Revealing connections, studying the interaction and subordination of the constituent parts of objects of different nature allows us to identify analogies in their organization and study structures in the abstract without connection with real objects.
The structure of the financial market is the interconnection of the credit, stock, foreign exchange, insurance and precious metals market (Fig. 2.1). In turn, each of these components has its own complex structure and structure. The components of the financial market are its elements:
Market objects;
Market entities;
Market infrastructure;
Regulatory and Supervisory Bodies.
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Rice. 1.1 Segments of the financial market
Financial market objects are financial assets traded in this market. Financial assets mean money in national or foreign currency, securities, real estate, precious metals, deposits and loan capital.
Financial market entities are buyers and sellers of financial assets traded in the financial market. The subjects can be the state, population and organizations.
The financial market infrastructure is a set of organizational and legal forms that mediate the movement of financial market objects, a set of institutions, systems, services, enterprises serving the financial market and ensuring its normal functioning.
In simpler words, the infrastructure of the financial market is a complex of institutions and enterprises serving its direct participants in order to increase the efficiency of their operations.
The efficiency of the financial market is largely determined by the level of development of its infrastructure and the quality of the organization of interaction between financial market operators and institutional investors with its elements. The development of the financial market is ultimately carried out on the basis of its infrastructure and as it develops.
Regulation of the financial market is the ordering of the activities of all its participants and transactions between them. Regulation of the financial market is carried out by bodies or organizations authorized to perform regulatory functions.
Financial market regulation usually has the following objectives:
Maintaining order in the market, creating normal conditions for the work of all market participants;
Protection of market participants from dishonesty and fraud of individuals or organizations, from criminal organizations and criminals in general;
Ensuring a free and open process for pricing securities based on supply and demand;
Creation of an efficient market in which there are always incentives for entrepreneurial activity and in which every risk is adequately rewarded;
In certain cases - the creation of new markets, support for the markets and market structures necessary for society, market initiatives and innovations, and others;
Impact on the market in order to achieve any public goals (for example, to increase economic growth rates, reduce unemployment); and protecting the public interest in the marketplace.
The regulation of the financial market is carried out by federal executive bodies - services specially created for these purposes. The Federal Service for Financial Markets (FFMS) is responsible for the adoption of regulatory legal acts, control and supervision in the field of financial markets (except for insurance and banking). The FFMS of Russia is directly subordinate to the Government of the Russian Federation.
The main powers of the FFMS:
Regulation of the issue and circulation of emissive securities, including the implementation of state registration of securities issues and reports on the results of the issue of securities, as well as registration of securities prospectuses;
Control and supervision of issuers, professional participants in the securities market and their self-regulatory organizations,
Generalization of the application of legislation and submission to the Government of the Russian Federation of proposals for its improvement and development of draft legislative and other normative legal acts;
Ensuring the disclosure of information on the securities market in accordance with the legislation of the Russian Federation;
Organization of research on the development of financial markets.
In the field of insurance, the Federal Insurance Supervision Service (FSIS) performs the supervisory function. The FSIS performs the functions of control and supervision in the field of insurance activities, which is under the jurisdiction of the Ministry of Finance. The main functions of the FSSN:
Making decisions on the issuance or refusal to issue licenses, on the cancellation, restriction, suspension, restoration and revocation of licenses to insurance companies;
Maintaining a unified state register of insurance business entities and a register of associations of insurance business entities;
Monitoring compliance by insurance business entities with insurance legislation, including through inspections of their activities;
In cases stipulated by law, appeal to the court with claims for the liquidation of the subject of insurance business - a legal entity or for the termination of the subject of insurance business - an individual person as an individual entrepreneur;
Generalization of the practice of insurance supervision, development and submission, in accordance with the established procedure, of proposals for improving the insurance legislation governing the implementation of insurance supervision.
The Federal Service for Financial Monitoring (FSFM) carries out the functions of countering the legalization (laundering) of proceeds from crime and the financing of terrorism, as well as the development of state policy, legal regulation and coordination of activities in this area of other federal executive bodies.
The Federal Antimonopoly Service (FAS) is responsible for maintaining competition in the financial services market.
Banking regulation and supervision is carried out by the Central Bank.
Through all of the above bodies, the state regulation of the financial market takes place. It should be noted that in the structure of the financial market there is also such an element as self-regulatory organizations (SRO). SRO of professional participants in the securities market is a non-profit organization based on the membership of professional participants in the securities market, operating on the basis of a license issued by the FSFM. The largest SROs in Russia are the National Association of Securities Market Participants (NAUFOR) and the Professional Association of Registrars, Transfer Agents and Depositories (PARTAD).
Tasks of self-regulatory organizations:
Providing conditions for professional activity in the securities market;
Compliance with the standards of professional ethics;
Protecting the interests of securities holders and other clients of professional participants in the securities market;
Establishment of rules and standards for conducting transactions with securities, ensuring efficient activity in the securities market.
On the securities market, the object of purchase and sale (financial asset) is all types of securities issued by enterprises, various financial institutions and the state.
In accordance with Article 142 of the Civil Code of the Russian Federation, a security is a document certifying, in compliance with the established form and mandatory details, property rights, the exercise or transfer of which is possible only upon presentation.
According to the law "On the Securities Market", securities include the following types: stock, government bond, bond, bill of exchange, check, deposit and savings certificates, bearer savings book, bill of lading, privatization securities. At the initial issue and placement of securities, their prices are set by the issuers. Further, prices are set in exchange trading by concluding transactions for the purchase and sale of securities. The price of this financial asset corresponds to the price of the last transaction. In the foreign exchange and precious metals market, pricing occurs in a similar way. The subjects in the stock market are investors and issuers. In the financial market, issuers act exclusively in the role of a seller of securities with an obligation to comply with all requirements arising from the conditions of their issue. The issuers of securities can be the state and legal entities created, as a rule, in the form of joint stock companies. In addition, securities issued by non-residents can circulate on the national financial market. Investors are subjects of the financial market who invest their money in various types of securities in order to generate income. This income is generated by the investors receiving interest, dividends and an increase in the market value of securities. Investors operating in the financial market are classified according to a number of characteristics. According to their status, they are subdivided into individual and institutional investors. For investment purposes, there are strategic (acquiring a controlling stake in order to carry out strategic management of the enterprise) and portfolio investors (acquiring certain types of securities solely for the purpose of generating income). Domestic and foreign investors are distinguished by belonging to residents in the national financial market.
Within the framework of the infrastructure of the financial market (and the stock market in particular), its main components can be distinguished (Figure 2.2):
The trading system as a set of infrastructure elements, including exchanges and other trade organizers, providing the purchase / sale of financial instruments;
Settlement system as a set of infrastructure elements, including banks and non-bank credit and clearing organizations, providing clearing of transactions with financial instruments, maintaining cash accounts of participants in trading in financial instruments and their clients and making settlements based on its results;
The accounting system as a set of infrastructure elements, including registrars and depositories, ensuring the fixation and accounting of the transfer of ownership of financial instruments as a result of their circulation.
Rice. 2.2 Generalized scheme of the organization of the financial market [15, p. 231]
Exchanges occupy a key place in the infrastructure of the stock, foreign exchange and gold markets. As the original regulators of markets, classical stock exchanges have historically been the forerunners of government capital markets regulators. In fact, the regulation of all organized trading in financial instruments was initially concentrated in the hands of exchanges. Subsequently, in an effort to convince investors that they are protected from abuses by listed corporations, stock exchanges have implemented corporate governance standards for listed companies. Exchanges have established their own regulations governing how financial instruments are traded by offering standardized formats for trading contracts to brokers and investors.
Tasks of the stock exchange:
Providing a centralized place where both the sale of securities to their first owners and their secondary resale can take place;
Revealing the equilibrium exchange price;
Accumulation of temporarily free funds and facilitating the transfer of ownership;
Ensuring publicity, openness of exchange trading;
Providing arbitration;
Providing guarantees for the execution of transactions concluded on the exchange;
The largest stock exchanges are located in New York, London, Frankfurt, Shanghai, Singapore.
In Russia, the main trading in securities takes place on the Moscow Interbank Currency Exchange (MICEX) and the stock exchange of the Russian Trading System (RTS);
A securities depository is a legal entity that provides services to the main participants in the stock market for the storage of securities, regardless of the form of their issue, with the appropriate deposit taking into account the transfer of ownership of them. The relationship between the securities depository and the depositor is governed by the relevant legal regulations and the terms of the depositary agreement. The activities of a securities depository are subject to compulsory state licensing.
Registrar of securities (or the holder of their register). It is a legal entity that collects, records, processes, stores and provides data on the register of holders of the issuer's securities. This register represents all registered owners, indicating the quantity, par value and category of securities they own as of a specific date.
Settlement and clearing centers. They are institutions serving the activity of which is to collect, reconcile and correct information on concluded transactions with securities, as well as in the implementation of offset on their deliveries and settlements on them. Such centers are usually created at stock and commodity exchanges.
Investment dealers or underwriters are special banking institutions or companies engaged in the primary sale of issued shares and bonds by purchasing new issues and organizing their subscription (sale) to participants in the secondary stock market in small lots.
Information and Consulting Centers - they serve the main participants in all types of financial markets, both individual and institutional. These centers include qualified marketers, lawyers, financial experts, investment consultants and other specialists in operations in the financial market. The system of such centers has been widely developed in countries with developed market economies (in our country, such services are provided mainly by financial intermediaries).
A financial asset in the foreign exchange market (forex) is foreign currency and financial instruments serving transactions with it.
The subjects of the foreign exchange market are buyers and sellers of currency. They are the state, banks, organizations and individuals.
The main infrastructural elements of the foreign exchange market are banks, brokerage companies, currency exchanges. Banks occupy the leading place among the intermediaries of the foreign exchange market. Since they maintain accounts (national and foreign currency) and have developed telecommunication systems, it is very convenient for them to carry out orders of clients for the purchase and sale of foreign currency. Banks constantly trade currencies within the country and abroad, both directly one-to-one and through currency exchanges. To do this, banks must obtain a license from the central bank.
The foreign exchange market has its own structure, which includes national (local) markets, international markets and the world market. They differ in the scale and nature of foreign exchange transactions, the number of currencies, the level of legal regulation, and others.
In the precious metals market, a financial asset is gold or other precious metals and stones. The subjects and infrastructure of this market are similar to the foreign exchange market.
The object of economic relations in the credit market is credit resources, as well as financial documents, the circulation of which presupposes the condition of repayment and payment. The actors in this market are borrowers and lenders.
Lenders provide a loan for a specified percentage. The main function of lenders is to sell monetary assets (both their own and borrowed ones) to meet the various needs of borrowers for financial resources. Lenders in the financial market can be: the state, commercial banks, non-bank financial institutions.
Borrowers receive loans from lenders against certain guarantees of their repayment and for a certain fee in the form of interest. The main borrowers of monetary assets in the financial market are the state, commercial banks, enterprises and the population.
The credit market is a general designation of those markets where there is supply and demand for various means of payment. Credit transactions are mediated, as a rule, by credit institutions (banks and others), which borrow and lend money, or the movement of various debt obligations that are bought and sold on the securities market. Consequently, the credit market provides funds for investment at the disposal of enterprises, and it is on it that money moves from those sectors of the economy where there is a surplus to those sectors that are experiencing a shortage of them.
In the credit market, businesses borrow money to finance their investments; sometimes businesses lend money, but, as a rule, the manufacturing sector borrows more than it gives. Therefore, we can say that one of the main tasks of the credit market is to direct the savings of the population and free funds to intermediaries for investments. And banks are the main infrastructure institutions and contribute to the efficient functioning of both the credit and financial markets as a whole.
The loan price is the interest paid on the loan. The interest rates are set by banks independently. Interest on loans and deposits should be linked to the refinancing rate set by the Central Bank. But in practice, we see that banks set interest rates many times higher than this discount rate.
Insurance market - the financial asset here is insurance coverage in the form of various insurance products. This is a very peculiar object of financial relations. Only it is inherent in such features as the creation of special funds, their use exclusively when the designated events occur, the probable nature of these events.
The opinions of various authors differ on this link. Some of them consider the insurance market as an infrastructure of the financial market, and some do not at all single out the insurance market as a separate segment of the financial market. Nevertheless, it is generally accepted to single out this market as a separate segment.
In the insurance market, the main actors are insurers and policyholders. Insurers sell various types of insurance services (insurance products). The main function of insurers in the financial market is to carry out all types and forms of insurance by assuming various types of risks for a fee with the obligation to reimburse the insurance subject for losses upon the occurrence of an insured event.
The main insurers are: insurance firms and public companies (providing insurance services to all categories of insurance subjects); captive insurance companies and companies - a subsidiary of a holding company (financial and industrial group), created for the purpose of insuring mainly business entities that are part of it; risk reinsurance companies (reinsurers) that take part (or all) of the risk from other insurance companies (the main purpose of reinsurance operations is to split large risks to reduce the amount of reimbursable loss by the primary insurer upon the occurrence of an insured event).
Policyholders are subjects of the financial market who buy insurance services from insurance companies and firms in order to minimize their financial losses upon the occurrence of an insured event. The policyholders are both legal entities and individuals.
Pricing in the insurance market is significantly different from other segments. Prices for insurance services are set based on the likelihood of an insured event and other factors.
Of the infrastructure entities, insurance brokers (agents) can be distinguished. The basis of income of insurance brokers is made up of commission payments from the amount of transactions concluded by them.
Thus, various participants operate in the financial market, whose functions are determined by the goals of their activities and the degree of participation in the performance of individual transactions. The composition of the main participants in the financial market is differentiated depending on the forms of transactions, which are subdivided into direct and indirect.
3. The role of the financial market in the development of the economy of modern Russia
The current global financial crisis is the most significant in the last 70 years, after which the markets will have a fundamentally different structure and growth model. We can say that the history of financial markets was divided into two parts: before the crisis and after. There is hardly anything more subject to uncertainty than the state of the financial markets. The financial sphere largely depends on the degree of trust or distrust in it and always enhances the effect of the factor that prevails. This is what makes financial markets dangerous.
In the first half of 2008, Russian participants in the financial market took a number of measures to mitigate the risks associated with the global financial crisis. For example, individual banks began to cut back on net external borrowing. The growing cost of borrowing in the domestic deposit market, coupled with unclear prospects for attracting external borrowings, led to an increase in interest rates on bank loans and corporate bond yields. However, the changes affected only certain segments of the Russian financial sector and, at the same time, not all of its participants. Until the beginning of August 2008, the financial market retained the main trends that had developed during the period of favorable conditions on foreign markets. At the same time, the risks associated with these trends continued to grow.
In the second half of 2008, the situation in the global economy, and especially in the financial sector, deteriorated sharply. In the face of an increasing liquidity shortage, participants in the global financial market reduced their investments in the economies of emerging markets, in particular in Russia.
Thus, we can conclude that the destabilization of the world financial market in 2007-2008. led to a significant deterioration in the situation on the Russian market due to a decrease and increase in the cost of external funding, an outflow of private capital from the Russian market and a decrease in mutual trust among financial market participants. To one degree or another, these factors affected all segments of the Russian market, leading to a decrease in securities quotations, an increase in rates in all market segments.
In the first half of 2009, the Russian financial market began a gradual recovery, overcoming the consequences of the global financial and economic crisis in the second half of 2008.
The total volume of the main segments of the Russian financial market, which sharply contracted during the crisis, began to increase. As a result, at the end of June 2009 it exceeded the country's GDP (Fig. 3). The main contribution to the dynamics of the total volume of market resources in the period under review was made, as before, by the stock market. Equity market capitalization at the end of the first half of 2009, according to estimates, reached 42% of GDP, the debt of the non-financial sector on bank loans amounted to 41% of GDP, and the volume of outstanding debt securities - 20% of GDP. ...
Rice. 3. Dynamics of volume indicators of the Russian financial market.
The recovery began after the currency, money and stock markets reached their maximum decline in late January - mid-February 2009. The minimum values of the exchange rate of the ruble against the bi-currency basket, the dollar and the euro, the maximum rates of the money market in recent years, the minimum quotations of corporate securities and the volume of transactions in the primary and secondary segments of the stock market were recorded. At the same time, the high level of lending and deposit rates of banks on basic transactions with non-financial organizations and the population remained against the background of low activity in the segment of lending to non-financial borrowers (Fig. 4).
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Rice. 4. Dynamics of individual price indicators of the Russian financial market
The prompt and large-scale anti-crisis measures taken in late 2008 - early 2009 by the Government of the Russian Federation and the Bank of Russia, which helped mitigate the most acute phase of the crisis, had a stabilizing effect on the Russian financial market. At the same time, the effect of the activities carried out by the central banks of leading foreign countries began to show. From the second half of February 2009, the world financial markets began to gradually stabilize, and there were signs of a recovery in prices on the world energy market.
In the following months, the improvement in the situation on the world commodity markets, the growth of the main foreign stock indices, the stabilization of the situation in the domestic foreign exchange and money markets, the net inflow of private capital into Russia that began in April-May weakened the influence of negative factors, contributing to the improvement of the situation on the Russian financial market.
In particular, the relatively high level of interest rates in the Russian economy against the background of the nominal strengthening of the ruble against the bi-currency basket contributed to the resumption of the inflow of speculative capital to the Russian stock market.
The weakening of devaluation expectations for the ruble, the slowdown in inflation, and the cessation of the outflow of private capital allowed the Bank of Russia in April to move to lower rates on its operations in order to help lower rates in the economy, increase lending activity of banks and overcome the decline in production. By the end of the first half of the year, the first positive symptoms were outlined in the credit and deposit market.
The recovery of the domestic financial market was accompanied by a change in the significance of certain types of risks in its various segments. The liquidity crisis was largely overcome in the money market, as evidenced by a decrease in interest rates on ruble-denominated interbank loans and REPO operations, as well as a decrease in banks' demand for refinancing instruments by the Bank of Russia. However, credit risks increased in the debt market, which manifested itself in a steady increase in overdue debt on bank loans to the non-financial sector and a rapid increase in the number of corporate bond defaults. At the same time, the differentiation of borrowers (banks and non-financial organizations) by their credit quality increased.
The Russian financial market continues to perform its inherent functions. The relationship between the financial sector and the real sector of the Russian economy remained, although somewhat weakened.
The financial market still allows the implementation of the function of transforming savings into investments, but on a limited scale compared to the pre-crisis period. The weakening of the connection between the financial and real sectors was manifested, first of all, in the difficulty of access to the credit and stock markets for corporate borrowers who do not belong to the category of first-class borrowers. In these conditions, measures for state support of systemically important enterprises in various sectors of the economy became more and more important.
In the first half of 2009, close ties remained between segments of the Russian financial market. Despite the very high volatility of price and volume indicators in all market segments, the dynamics of these indicators was quite consistent throughout the entire period under review.
Thus, in the first half of 2009, the Russian financial market as a whole withstood the economic difficulties of the financial crisis and began to recover. The main participants in the financial market continued to carry out their operations, the market infrastructure functioned smoothly. Further development of the Russian financial market depends on the interaction of many external and internal factors.
Conclusion
Financial market is a set of economic relations for the mobilization, distribution, sale and purchase and effective use of temporarily free funds of legal entities and individuals, as well as for the transformation of these funds into the capital of enterprises and organizations.
The financial market is designed to perform the following functions:
Transformation of savings into investments;
Assessment of the market value of financial assets;
Ensuring liquidity of financial assets;
Creation of infrastructure for the exchange of financial assets;
Risk insurance.
The main function of the financial market is to mobilize depositors' funds for the purpose of organizing and expanding production.
As the world experience shows, the effective functioning of the financial market is impossible without the regulatory and supervisory activities of state bodies. In the context of the emergence of the financial market (and the securities market in particular), the functioning of such structures becomes extremely important.
The national financial market consists of five basic segments: the credit market, the securities market, the foreign exchange market, the insurance market, and the precious metals market. In general, the financial market has a complex structure.
The main actors in the financial market are buyers and sellers of financial assets. Participants performing auxiliary functions in the financial market are represented by numerous subjects of its infrastructure. The infrastructure of the financial market is a complex of institutions and enterprises serving its direct participants in order to improve the efficiency of their operations.
A financial asset is a commodity in the financial market. These objects are not homogeneous and specific to each of the segments.
The infrastructure system and the main institutions of the financial market work closely together. Exchanges occupy a key place in the trading system and, in general, in the infrastructure of the financial market.
The main features of a developed financial market are: stability of the regulatory framework; information transparency of operations and market participants; a fairly large circle of participants and a high-tech infrastructure. The presence of these attributes enables commercial organizations to raise funds quickly and efficiently.
At present, the Russian financial market does not meet the definition of an effective financial market, that is, among its properties there are no full-fledged performance of macroeconomic functions, sufficient capacity, freedom and fairness. As a result, the domestic financial market is unable to properly perform the functions of transforming savings into investments, the formation and distribution of investment funds, the redistribution of risks and their insurance, the redistribution of property and capital, the determination of the prices of financial assets, the provision of a mechanism for transactions with financial assets, and the reduction of transaction costs. market participants, promoting financial stability.
List of sources used
1. The Civil Code of the Russian Federation as of September 10, 2008-M .: Prospect, 2008.
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3. On the organization of insurance business in the Russian Federation: Federal Law of November 27, 1992 No. 4015-I (as amended on June 21, 2004 N 57-FZ). // Reference and legal system ConsultantPlus - Last updated 20.11.2009.
4. On currency regulation and currency control: Federal Law of December 10, 2003 No. 173-FZ (as amended on July 22, 2008). // Reference and legal system ConsultantPlus -Last updated 20.11.2009.
5. On banks and banking activities: Federal Law of June 19, 2001, No. 82-FZ // Inform.-legal. system "Expert-Garant". - Version from 08/20/09
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- 20.1. The essence of the financial market and its role in the economy
- 20.2. Financial market structure
- 20.3. Financial market functions
- 20.4. Financial market organization models and their features
- 20.5. Financial market participants
The essence of the financial market and its role in the economy
The effective functioning of the economy of any state in modern conditions is impossible without a developed financial market.
The financial market is a rather complex and multifaceted economic category associated with various processes taking place in the economy. This predetermines the ambiguity of opinions about the essence, structure and functions of the financial market.
In economic literature financial market in a broad sense, it is characterized as an organizationally formed economic space where the sale and purchase of financial resources, instruments and services is carried out. In a narrow sense, the financial market is defined as a set of economic relations that ensure the mobilization and redistribution of temporarily free funds, financial resources, the circulation of securities between market entities.
The economic basis of the financial market is made up of various forms of capital (monetary, loan, fictitious), interconnected. The developing real sector of the economy requires the formation of certain financial relations and institutions. The use of capital in production (commercial and industrial capital) in the form of long-term productive assets creates cash income, or money capital. The amount of money capital at some point exceeds the needs of production, and it can be lent out for a certain fee. The development of market relations leads to the growth and concentration of loan capital in specialized financial and credit institutions and the formation of a loan capital market, as well as to the accumulation of funds from individual investors through the issuance of special documents - securities. The issuers who issue securities and thus raise funds, there is a real increase in capital. The investor, on the other hand, increases his capital fictitiously, certifying the investment of capital with securities that give the right to receive income, therefore the capital embodied in them is called fictitious. The development of the fictitious capital market leads to the fact that securities acquire their own value, the ability to buy and sell, i.e. become an investment commodity and form the securities market. The latter is closely interconnected with the economic processes taking place in the markets of real, loan and money capital, reflecting their combination, fragmentation, and redistribution. Each form of capital has a different functional purpose and influences the formation of the structure of the financial market. The financial market provides the movement of securities, credit resources and monetary funds that act objects of relations in this market. Subjects of relations are the state, enterprises (organizations) of various forms of ownership, individual citizens.
Representing a complex system of economic relations and forms of their organization, the financial market provides financing for economic growth, achieving macroeconomic equilibrium, intersectoral and international capital outflow, increasing investment activity of business entities. In the financial market, various financial instruments are used, specific financial institutions operate, forming an extensive and diverse market infrastructure. With the help of the financial market, funds from internal and external investors are accumulated, their redistribution between business entities, the state, which provides funding for priority production, scientific and technical programs, allows to increase production capacity, increase resource potential, and implement social events.
Attraction of funds through the financial market is possible only with a wide selection of its instruments, a developed system of exchange and over-the-counter trading, streamlined accounting, and the presence of mechanisms to protect market participants from risks. The financial market also provides investors with various options for investing funds, provides them with income on capital, participation in the financial results of business entities.
The financial market plays an important role not only in the reproduction process, ensuring the free movement of funds of enterprises (organizations), but also in the organization of public finances. The financial market is seeking funds to cover the budget deficit in a non-inflationary way.
Thus, the financial market accumulates temporarily free capital from a variety of sources, efficiently distributes it between numerous consumers, directs to the most effective areas, accelerates capital turnover and contributes to economic development.
Depending on the volume and nature of transactions, financial markets can be divided into national, regional and international.
National financial markets ensure the movement of cash flows within the country and the relationship with world financial centers. The subjects of the national economy conduct transactions in these markets. The degree of involvement of national markets in the operations of the world financial market depends on the degree of integration of the country's economy into the world economy, the state of its monetary and credit systems, the development of the stock market, the taxation system, etc.
Regional financial markets serve a specific area. The countries of this region coordinate monetary and credit policy, create regional financial and monetary organizations.
International financial markets serve the intercountry movement of capital, implementing a system of financial, currency and credit relations between individual states, corporations of different countries, residents and non-residents. The world financial centers were formed, where the largest exchanges and banks, specialized credit and financial institutions were concentrated.
For the normal development of the economy, the mobilization of temporarily free funds of individuals and legal entities and their distribution and redistribution on a commercial basis between various sectors of the economy are constantly required. In an efficiently functioning economy, this process takes place in the financial market. He carries out the accumulation, mobilization, distribution and redistribution of temporarily free funds of individuals and legal entities, as well as the state.
Financial market Is a system of relations that arises in the process of the exchange of financial assets. Elements financial market, that is, financial assets are money in national and foreign currencies, securities, precious metals and stones (except for jewelry and household items made from them and their scrap), deposits and credit capitals.
One of the central ideas of the functioning of the financial market is the theory efficient market, which implies information efficiency. An efficient market is one in which prices reflect all relevant information. All information is divided into three groups:
1. Past information reflecting the previous state of the market (dynamics of rates, trading volumes, demand, supply).
3. All information, including both public and internal information, which is known only to a narrow circle of persons (for example, due to official position).
The market is efficient in relation to any information if it is immediately and completely reflected in the price of an asset, which makes this information useless for obtaining superprofits. Depending on the amount of information that is immediately and completely reflected in the price, it is customary to distinguish three forms of market efficiency:
1. Weak form assumes that past information is fully reflected in current market prices for an asset. With closed information, an investor can get super profits.
2. The moderate form assumes that current market prices reflect not only past price changes, but all other public information as well.
3. The strong form assumes that all information, both public and internal, is reflected in the current market prices. In this case, super profits cannot be obtained even by people with classified information.
The financial market includes the following segments:
1. The securities market.
2. Credit market.
3. Foreign exchange market.
Financial market participants are buyers and sellers of financial assets, as well as intermediaries between them. Subjects carrying out transactions in the financial market are called financial institutions. These include banks, stock exchanges, investment institutions. Investment institutions include the following entities:
1. Investment consultant - an individual or legal entity professionally engaged in the provision of paid consulting services regarding the issue and circulation of securities.
2. An investment fund of the following types:
· Joint-stock investment fund - any open joint-stock company, the exclusive type of activity of which is the issue of its own ordinary registered shares for the mobilization of funds and their subsequent investment in other securities and bank accounts;
· Mutual investment fund (UIF) - a property complex without creating a legal entity, the trust management of the property of which is carried out by trust companies.
3. Investment company - an association that invests capital through direct and portfolio (through an intermediary) investment and performs some of the functions of commercial banks. Investment companies are represented by the following types:
· Holding - a parent company that owns a controlling stake in other subsidiaries and specializes in management;
Financial company - an organization registered in the form of a business company (joint-stock company, company
limited liability companies, additional liability companies) according to the legislation of the country of its location.
In turn, it includes the following companies:
ü insurance - a legal entity carrying out insurance activities on the basis of a license obtained;
ü trust (trustee) - a commercial organization that manages the client's property;
ü leasing - a legal entity that acquires property at the expense of borrowed or own funds
and provides it as an object of lease to the lessee for a fee for a specified period in temporary possession and use with or without the transfer of ownership of this object.
4. Non-profit financial institution (non-state pension fund, credit union, mutual insurance society, self-regulatory organization of professional participants in the financial market).
Financial intermediaries perform the function of selecting borrowers and lenders or traders. They provide the following services to financial market participants:
1. Contribute to reducing the cost of operations while increasing their number.
2. Pool the savings of their clients for a large investment in the primary market.
3. Diversify risk, which is difficult for individual savings owners to do on their own.
4. Transform the maturity of the primary security into different maturity dates for indirect liabilities.
Professional activity is licensed in the financial market. It is represented by the following types:
1. Intermediary (broker activity) - the execution of transactions for the purchase and sale of securities at the expense and on behalf of the client.
2. Commercial (dealer activity) - a professional participant in the securities market performing transactions for the purchase and sale of securities on his own behalf and at his own expense with the obligation to conclude transactions at the purchase and sale prices announced by this legal entity.
3. Depository activities - activities related to the accounting, settlement and storage of securities, as well as the calculation, accrual and payment of income on securities.
4. Trust (trust) activity - the activity of managing securities belonging to a specific person on the basis of ownership, carried out by another person by transferring these securities to him for a certain period of time.
and trust management.
5. Activities of an investment fund, providing for the issue of shares in order to mobilize investors' funds and their investment on behalf of the fund in securities, as well as in bank accounts, deposits and deposits, in which all risks associated with such investments are fully attributed to the account of the shareholders of this fund and are realized by them by changing the current price of the fund's shares.
6. Activities of a specialized registrar (independent registrar), ensuring the performance of the functions of the holder of the register of shareholders, carried out under an agreement with the issuer.
7. Clearing activities are activities to determine mutual obligations (collection, reconciliation, correction of information on transactions with securities and preparation of accounting documents on them) and their offset for the supply of securities and settlements thereon.
The ratio of supply and demand, as well as the level of prices for financial assets, is constantly changing in the financial market as a whole and in its individual segments. This general state of the dynamics of individual elements of the financial market is a very complex economic phenomenon, since it is formed under the influence of many heterogeneous and multidirectional intramarket and macroeconomic factors. The degree of activity of the financial market, the ratio of its individual elements are determined by studying its conjuncture. Financial environment market is a form of manifestation of a system of factors (conditions) that characterize the state of demand, supply, prices and competition in the market as a whole, its individual types and segments.
Obtaining any income in business is most often associated with risk, and the relationship between these two parameters is directly proportional: the higher the required or expected return, the higher the degree of risk associated with the possible non-receipt of this return. Profitability Is the ratio of the amount of income to the invested funds. Financial risks- this is the probability of losses occurring due to a high degree of uncertainty in the results of transactions with financial assets, as well as the influence on them of many economic and non-economic factors, including random ones. The risk involved in owning an asset can be divided into two parts:
1. Market (systemic, non-diversified risk).
2. Specific (non-market, diversified risk).
Market risk is associated with the dynamics of the economy as a whole, with generally significant events (war, revolution, etc.). If in the economy, for example, there is a recession, then this is reflected in the profitability of financial instruments. Market risk cannot be ruled out as it is system-wide. Specific risk is associated with the individual characteristics of a particular asset, and not with the state of the market as a whole. The owner of a share of an enterprise, for example, is exposed to the risk of losses due to a strike at this enterprise, the incompetence of its management, etc. Such a risk can be reduced to almost zero by choosing a widely diversified portfolio, i.e. investing money in shares of more than one company , and in the shares of several (specially selected) companies at once.
Financial risks are classified as follows:
· If possible insurance (insured, non-insured).
· By the level of financial losses (permissible, critical, catastrophic).
· By the sphere of origin (external, internal).
· As far as possible foresight (predictable, unpredictable).
· On possible consequences (causing financial losses, entailing lost profits).
The following types of financial risks:
· Inflationary risk is the risk that when inflation rises, the received monetary incomes depreciate in terms of real purchasing power faster than they grow;
· Currency risk - the danger of currency losses associated with a change in the exchange rate of one foreign currency in relation to another during foreign economic, credit and other currency transactions;
· Liquidity risk is the risk associated with the possibility of losses during the sale of financial assets due to changes in the assessment of their quality and use value;
Interest rate risk - the danger of losses as a result of the excess of interest rates paid on borrowed funds over rates on loans provided, etc.
The modern development of the domestic economy provides for the active participation of the state as a regulatory and governing body. The degree of government intervention in emerging markets should be significantly higher than in developed financial markets. State regulation of the financial market carried out by the following methods:
1. Direct (administrative), that is, by establishing mandatory requirements for financial market participants, licensing professional activities in the market, ensuring transparency and equal awareness of market participants, maintaining law and order. Thus, direct regulation exists in the form of a system of legal norms (laws, decrees, decrees, etc.) and state bodies (the Ministry of Finance of the Republic of Belarus, the National Bank of the Republic of Belarus, etc.), ensuring their implementation.
2. Indirect (economic), providing for the implementation of a certain tax, monetary policy, policy in the field of formation and use of state budget funds, management of state property, etc.
The financial market of the Republic of Belarus is at the stage of formation. The most developed segments are the credit and foreign exchange markets. The securities market is most actively represented by the government securities market. The volumes of both on-exchange and over-the-counter transactions in corporate securities are minimal.
Over the past two decades, there has been an acceleration in the process of globalization of financial markets, i.e., investors' access to financial markets around the world is expanding. This found expression in the formation of the global financial market. It is regulated by various kinds of international agreements and international institutions. The development of financial globalization is stimulated by:
· Uneven economic development and distribution of financial resources;
· The imbalance of the current balances of payments, an acute shortage in most countries of their own resources for making investments, covering budget deficits, carrying out socio-economic transformations, fulfilling debt obligations on domestic and foreign borrowing;
· The introduction of modern electronic technologies that allow transactions to be carried out in real time.
Forms of financial globalization are as follows:
1. International trade.
2. Foreign direct investment.
3. International market of financial loans, etc.
