In the modern world, the economic situation in a company or even in an entire country may depend on the movement of finance in the stock market. US stock markets have a particular impact on the global economy. This is not surprising, because the States are among the most developed and influential countries in the world both in the political sphere and in the economic sphere. Therefore, positive and negative trends in the stock markets, respectively, lead to an increase or fall in certain financial indicators.
What is the stock market?
The stock market (or securities market) is a set of economic relations regarding the issue and circulation of various securities between market participants. In other words, it is a financial market where it is possible to buy and sell stocks, bonds, etc. It is also the central platform for transactions between traders and stock brokers.
As for the stock market infrastructure, it can be of several types:
- Investment, which includes banking institutions, brokers and dealers, non-bank financial institutions.
- Technical Here we are talking about clearing and settlement organizations, registrars. In particular, the US stock markets have in their structure all those organizations that facilitate transactions.
- Functional. These include stock exchanges, alternative trading systems, over-the-counter trading structures, etc.
- Informational, which includes analytical and informational agencies, business press.
The structure of each American stock market involves a huge number of corporations, small and medium-sized firms, and, accordingly, many employees of these enterprises. Therefore, if the US stock market crashes, the consequences could lead to a serious crisis.
History of occurrence
According to historians and financiers, stock markets appeared centuries ago. It is believed that the history of such markets begins from the moment the government securities market emerged. This event tentatively took place in the XV-XVI centuries. It was at that time, due to a shortage of funds for various needs, that the state decided to issue securities and place them both inside the state and outside it. So, in Antwerp there was a stock exchange where operations on the placement of securities of state significance were carried out. Later, thanks to improved trading operations, stock exchanges arose.
The very first private stocks appeared in Amsterdam in the 17th century thanks to the East India Company. It was she who began trading stocks on the stock exchange after it was announced that it would participate in the profits of this corporation.
To date, the work of the securities markets is already organized differently. For example, the US stock markets are developing rapidly rather qualitatively, rather than quantitatively, as it was a couple of decades ago. Thanks to the emergence of new information technologies, it became possible to improve the OTC market.
Exchange Principles
The key function of the stock market is to ensure the success of the exchange. The exchange is a place where investors invest free cash, and issuers are engaged in attracting these finances.For example, if the number of investments increases and the US stock market is activated, the consequences of this may be important not only for direct participants in the market, but also for the business as a whole.
The exchange, in turn, creates favorable conditions for the functioning of the stock market and its effective operation. If the work of all this mechanism is disrupted, then the stock market crashes. The United States is the most interested party regarding the normal operation of the exchange, since the so-called financial center is located in this state.
To understand the whole system, it is enough to give an example of a company in need of investment. To get external investment, its leaders put shares or other securities on the stock exchange. Then these securities are acquired by the trader. Thus, the stock market is redistributed between different enterprises and industries.
America's largest stock markets
For ordinary people who are not familiar with finances, the terms “stock market” and “stock market crash” are often incomprehensible. The United States and its inhabitants in this case have a greater idea of the securities markets, because the largest stock markets are concentrated here. They are characterized by the fact that ordinary shares do not have a par value. And if additional securities are floated, then the holders do not make a profit.
The term “stock markets" is considered by the USA as a special mechanism of action for effective trading on the exchange. Over the years, the States have been leaders in the field of finance and have secured the right to be called a financial center. It includes several of the largest and most famous Stock Exchanges: New York Stock Exchange called NYSE, its rival to NASDAQ and the relatively young AMEX Exchange.
NYSE Stock Exchange
It is one of the best and oldest stock exchanges in the world. It was founded in New York in the distant 1792, when it happened company merger NYSE with ARCA (or Archipelago Holdings). At the moment, only experienced broker specialists work in the exchange, who are engaged in improving the trading process as a whole. A hybrid system of exchange operations is involved here, which includes two not similar principles: auction and electronic orders.
What threatens the collapse of the US stock market if the system of work in this exchange is disrupted? Employees of more than three thousand companies that are involved in large-scale analysis to maintain liquidity will lose their jobs.
The system of stock markets in the Russian Federation
Stock markets in the Russian Federation are not as developed as in the States, since they are still very young. Their popularity has only recently begun to gain momentum, but the dependence on the situation in American markets is too great. So, the collapse of the US stock market for Russia is of great importance, since it can lead to enormous losses.
Despite this, experts generally characterize the Russian exchange as a combination of high risks and at the same time a high level of income. This suggests that there are positive trends that include:
- information transparency between market participants;
- significant growth in sales;
- exchange liquidity at a sufficient level.
Collapse and its consequences
It is known that at the beginning of 2016 the US stock market crashed, the consequences of which seemed irreversible. According to analysts, this is the most significant drop in the index over the past century. Many businessmen are seriously afraid of a recurrence of the 2008 situation when, when there was a global financial crisis. At that time, he did not pass over virtually any country, leaving his negative mark on the economy.
If we consider what threatens the collapse of the US stock market on a global scale, then first of all it causes panic in the society. And panic is destructive and destabilizes in all areas of life.At the same time, if the powers take the right steps to prevent a crisis, then this phenomenon will have minimal effect.
