Functions of the securities market

The securities market is a complex system of relations between individuals and legal entities, which is based on transactions related to the issue, redemption and circulation of securities. Securities are a means of attracting capital.

The main functions of the securities market, as well as of any other market, are divided into two large groups: general market and specific. Common market functions of the securities market determine the similarity of this market with other markets. And the specific functions of the securities market, on the contrary, distinguish this market among others.

Specific functions of the securities market:

- redistribution (the securities market plays an important role in the redistribution of money between different spheres and branches, this function also includes the transfer of money into a productive form, financing of the state budget);

- hedging (additional insurance of financial risks).

Common market functions of the securities market:

- price (the market plays an important role in the formation of market prices);

- commercial (generating income from a variety of transactions produced in the market);

- Information (information on various trade objects appears on the market, and in the future this information is brought to other participants of the commodity market and has a significant impact on them);

- Regulatory (in the market there are certain "rules of the game", the practice of dispute resolution, management and control bodies).

The securities market consists of several "mini markets": the stock market, the bond market, the government short-term bonds market (GKO), the state savings loan market (OGSZ), the federal loan bond market (OFZ), the foreign exchange loan bond market, the treasury bonds market, The market of financial institutions, the gold certificate market, stock exchanges, stock departments of commodity exchanges.

In addition, the primary and secondary securities markets are singled out . In the primary securities market , the sale of "freshly issued" securities is thriving. The secondary market has two components: exchange and over-the-counter trade. Exchange trade takes place on stock exchanges, and over-the-counter is street trade. OTC trade is widely used in the west, while in Russia the first option prevails.

The main objective of the securities market is the accumulation of financial resources and their redistribution through various transactions between market participants. At the same time for the performance of all these operations, securities are required, i. The securities market is an intermediary between investors and issuers of securities.

In the market there are various types of transactions with securities. All operations are conducted by several large groups of market participants. Firstly, these are operators that carry out securities purchase and sale transactions. Secondly, these are the organizers, who are responsible for the quality work of trading platforms. Thirdly, these are banks, depositories, clearing organizations, etc., which take account of mutual obligations. Fourthly, these are registrars who make entries in the registers of shareholders about the owners of the Central Bank.

The security starts its journey in the Primary market, where its primary placement takes place. The first investor who bought a security has the right to resell it, exchange it, etc. A dealer who bought a paper sells it at a market price.

Subsequently, the paper enters the secondary market, where all subsequent transactions occur. In this market, there is a redistribution of resources among investors. Here, operations are conducted by dealers and brokers. Dealers work for themselves, and brokers fulfill customers' orders. Clearing companies are responsible for accounting for mutual transactions between them. Money is transferred by banks, the transfer of securities from the seller to the buyer is carried out by depositaries. Registrars register the ownership of new customers in the registers. This is the simplest scheme of transactions, which usually takes place in the securities market.