Classification of the securities market
Classification of the securities market are Briefly discussed in this section below. The securities market is important part of Macroeconomics.
The concept of the national market covers the trade of residents among themselves (securities issued by both residents and non-residents, with denominations denominated in both national and national currencies). There is no movement of capital between countries on national markets.
In regional markets, a relatively closed turnover arises for the supply and consumption of monetary capital by enterprises and population within the region. Regionalism is inherent, first of all, in underdeveloped securities markets, with poor communications, with the absence of recognized country centers of securities trading.
By the nature of the movement of securities, securities markets are divided into primary and secondary markets.
The most important feature of the primary market is full disclosure of information for investors, allowing them to make an informed choice of a security for investing money. Everything that happens in the primary market is subject to information disclosure: preparation of a prospectus, its registration and control by state bodies from the standpoint of completeness of the submitted data, publication of the prospectus and subscription results, etc.
The most important feature of the secondary market is its liquidity.
Market liquidity is the ability to trade successfully and extensively, the ability to absorb significant volumes of securities in a short time, with small fluctuations in rates and at low selling costs.
The very mechanism of trading on the secondary market is set up to maintain a stable market, to limit speculation .
By the types of securities circulating, in particular, on the Russian market, today stand out:
• government securities market;
• the stock market, in which, in turn, there are three main segments (sometimes they are called echelons): blue chips (the most liquid shares of the largest Russian companies), second-tier stocks that are approaching them, but have not yet reached the corresponding liquidity, and shares of enterprises that practically do not appear on the market;
• the local securities market (in most cases, municipal bonds or bonds of a constituent entity of the Federation);
• markets for bills of exchange of different issuers;
• markets for derivative securities (mainly futures).
The classification of the securities market by trade organization includes the exchange market, the over-the-counter (retail) market and the electronic market.
The stock market is exhausted by the concept of the stock exchange as a special, institutionally organized market, where securities of the highest quality are traded and operations on which are performed by professional participants in the securities market.
The stock exchange must ensure consistency, liquidity and regulation of the market, determination of prices, accounting for market conditions.
In the case when the transactions are small, it is economically unprofitable to execute them through large specialized trading systems, the buyer goes directly to the dealer and buys the paper directly from him. This is a special segment of the securities market. It is called the retail (over-the-counter) market (OTC-market from the English Over the Counter — trade from behind the counter). The over-the-counter market covers the market for securities transactions carried out outside the stock exchange.
The main purpose of the functioning of the securities market is to form a mechanism for attracting investment to the economy by building relationships between those who are in need of funds and those who want to invest excess income.
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