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Finance and Statistics - Kovalev AM

2.5 STOCK MARKET AS PART OF THE FINANCIAL SYSTEM

The market, which addresses capital, called financial market. Usually there are different sectors of the financial market: credit market, stock market, currency market, the market of direct investments. Thus, the stock market is one of the types of financial markets. There are accumulated capital, concentrated, are centralized and ultimately invested in the production of coatings or become a source of public debt.

However, the origin of all securities not due to monetary capital, in the part in which the stock market is based on the money as capital, it is called the stock market, a large part of the securities market. The remaining part is relatively small, so often the concept of "stock market" and "securities market" are used interchangeably.

The securities market - a market where operations are performed with securities. In addition to buying and selling used and other types of operations, such as the release into circulation, redemption, mortgage, trust, etc.

The stock market is in fact not much different from other types of markets. Here, too, there are sellers, buyers and intermediaries are held advertising and marketing research.

Specificity is the product itself.

The securities are a form of fixation of certain economic relations of property, loan, purchase and sale. And this form of fixing makes it easy to change from one of the parties involved in these relationships, by changing the security holder. In all cases where the two sides of the economic relations do not seek to change the participants, they draw up the relationship by means of other types of contracts, such as the loan agreement, pledge agreements and others.

Securities - a form of existence of capital It differs from the productive, commodity and monetary forms. Capital in the form of securities may be transferred, traded on the market as a commodity, to replace the money in the calculations and, most importantly, profitable. The owner of the security of the capital as it is not, and has all the rights to it, recorded in the form of securities.

So, the stock market is similar to any other commodity market. Common goods are produced, and the securities are issued. For all markets must be the promotion of goods to the buyer, and for the stock market - to promote the securities to investors. The basis of this market is a commodity market, money and capital.

To the owner of the capital able to take part in investing, you need to have sufficient capital. This amount of capital is rarely available immediately. Usually this is preceded by a process of accumulation. The latter can be expressed in small capitals merging into one large or augmentation, growth capital. Another option accumulating sufficient amount of capital can be loaned to purchase it for a while with a condition of repayment. Accumulate capital or you can get it in the financial sphere of activity in the financial markets.

The stock market - one of the components of the central part of the country's financial system. As is known, the central part of the financial system is responsible for the process of redistribution of national income and gross domestic product. Redistribution takes place with the help of cost, insurance relations and relations arising in the stock market. All these relations are linked.

The budget needs to raise funds to cover the deficit. To this end, the government will issue and sell government securities, such as government bonds. The state is involved in a relationship stock as an investor to retain control over certain sectors or enterprises through the acquisition of blocks of shares of joint-stock companies or banks.

Insurance companies tend to be formed in the form of joint-stock companies. In this case, the stock transactions as they engage issuers. The bulk of the reserve funds of insurance companies used to invest in safe securities, such as government, performing the role of the investor. Profit of insurance companies depends on effective management of the securities portfolio.

The stock market traded temporarily idle capital. However, they may be used in other ways, such as to invest in bank deposits. Therefore, the stock market has to compete with other financial market sectors for their involvement. A number of factors determine the most effective direction of investment. The most important of these factors include: the level of profitability of the securities market, the level of bank interest rates, terms of taxation, the level of risk, the reserve ratio for banks, the conditions of the organization of different market sectors and convenience for investors, the liquidity of securities, etc.

The securities market has both general market and specific, peculiar only to him function. General market functions is considered to be commercial, pricing, information and regulatory functions. Commercial function is that transactions in the securities market are the source of income for those who conduct them. The price function is expressed in the fact that the securities market prices are formed, reflecting the most important macro and micro-economic patterns. The level of market prices for securities affects the capital market as a whole. Information function reflects the fact that, like any other market, the stock market produces information about the objects and participants of trade, brings this information to the interested parties, updates and monitors its objectivity. The regulatory function is expressed in the fact that the market creates the rules of trade, controls the process of trade in accordance with the regulations, establish the procedure for resolving disputes, organize control.

The specific functions of the securities market include redistributive function and the function of insurance pricing and financial risks. Redistributive function is carried out in three directions. Firstly, it ensures redistribution of capital between sectors and spheres of the country's national economy, as well as between the territories. And in recent reallocation of capital between the territories and it has an international character. Secondly, it performs redistribution savings wearing non-production character in the manufacturing sector. This applies primarily to the savings of the population. This redistribution is essential for effective use in the interests of the economy of long-term savings as retirement savings. Third, allows through the redeployment of temporary free funds to finance the deficit of the state budget for non-inflationary basis, ie without increasing the money supply.

The function of insurance pricing and financial risks has another name - the hedge. This feature appeared with the emergence of a class of derivatives: futures and options contracts.

The purpose of the issue and circulation of derivative securities - profit from the price fluctuations of the exchange of the corresponding asset. Derivatives are agreements on future purchase, and the purchase price is fixed on the day of conclusion of the contract. Derivatives allow their owner to avoid losses arising from adverse changes in prices.

For the financial system of the Russian Federation, the stock market is a relatively new type of financial relations, so not all economists distinguish it as an independent unit of the financial system.

Due to the fact that the stock market, expressing the financial and economic relations, performs the functions inherent category

Finance Rhee as a whole (distribution and control), it can be regarded as a financial category.

Tasks and functions of the stock market are specific, and it covers mainly the relations of redistribution, so rightly allocate it in a separate unit of the central part of the financial system.

Control questions

• As the financial system is determined?
• What are the names and characteristics of the parts of the financial system?
• What are the principles of the Russian budget system?
• How is the structure of the budget system?
• What is the structure of the federal budget?
• What are the role and nature of the budget classification?
• What is the structure of federal budget revenues?
• What is the difference between the fixed and regulating incomes rows?
• What are the features of extra-budgetary funds as part of the financial system?
• What are the challenges facing the pension fund and what are the sources of its formation?
• What are the uses of the Social Insurance Fund?
• What is the purpose of the State Employment Fund?
• What are the sources and destinations of the fund of obligatory medical insurance?
• 14. How to determine the need for economic extra-budgetary funds and their content?
• What are the organization, functions and types of insurance?
• What are the objects and the development of property insurance?
• What is the social value of life insurance?
• What is the essence of liability insurance?
• What are the features of environmental insurance?
• What specific types of insurance include business risks?
• What is the role of the hedge?
• What is the stock market, unlike other types of markets?
• What are the indicators of the stock market is characterized by macroeconomic situation?
• What are the general market of the securities market function?
• What are the specific functions of the securities market?