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Money and credit - Ivanov V.M.


10.1. Characteristics of the securities market

The securities market is a part of the loan capital market, where the issue, purchase and sale of securities is carried out. Through the securities market (banks, special credit institutions, exchanges), accumulated cash accumulations of enterprises and banks of various ownership forms, state and private individuals, which are then sent to production and non-production capital investments. Distinguish between the primary securities market, where the issue and initial placement of securities are carried out, and the secondary, where the purchase and sale (circulation) of previously issued securities is made.

If the total cost of the government exceeds the total tax revenue, then it should cover the difference, either by issuing new money into circulation, or by loan. The government takes money from the population, selling securities, which are government debt, i.e., government debt to the population.

Securities - these are documents circulating on the securities market and expressing property relations, as well as confirming the right to any property or money that cannot be sold or transferred to another person without presenting relevant documentary evidence. Securities are divided into two main categories: market and non-market.

A relatively small number of dealers carry out most transactions with government securities. The dealer may be a branch of a large bank or a brokerage firm, as well as a separate company specializing in this business. Dealers trade mainly with organizations - banks, insurance companies, large corporations, pension funds, foreign firms and commercial banks. When new treasury securities are sold, a primary government securities market is created. Dealers then create a secondary market by offering to buy and sell these securities between the dates of issue and maturity. In addition to the secondary market, individuals can sell and buy government market securities at commercial banks and through brokers. Typically, individuals buy a much smaller amount of securities than what is sold on the secondary market. The main participants in the securities market are:

• issuers - legal entities, state bodies, local administration bodies that issue securities into circulation and bear responsibility on their behalf for them to securities owners;

• investors - citizens or legal entities purchasing securities on their own behalf and at their own expense;

• Investment institutions - legal entities created in any legal form permitted by the law of Ukraine.

Given the weakness of current business structures and the lack of a developed land market in Ukraine, the most attractive sector of the financial market is securities, primarily government ones.