Since its inception, the stock market has attracted the attention of a huge number of people. Over time, his popularity did not fade away. Rather, the opposite: every year the stock market has become a professional area of an increasing number of participants.
Such popularity of the securities market is explained by the enormous opportunities that this area of the economy holds. Indeed, thanks to it, a huge number of enterprises were able to significantly accelerate their development. And investors who invested their money in this, subsequently received passive income. Often - very significant.
Definition
The securities market is the area of the economy responsible for the issue and circulation of securities (that is, for their issue, sale and resale). All these procedures are carried out on special trading floors - stock exchanges. In some cases, over-the-counter circulation is possible.
Stock exchanges as the main institutions of this market not only provide the possibility of issue and circulation, but also regulate these processes and the relationships and obligations that arise between bidders. To do this, they have all the necessary resources: equipment, specialists, regulatory and other documentation.
Appearance and Purpose
The stock market arose as a result of the emergence of a special method of raising capital. This was needed by the state, its individual units and a huge number of enterprises. The method itself consists in issuing securities for their subsequent purchase by investors. The proceeds of the sale are at the disposal of issuers, the purpose of which is to attract these funds. And persons who hold securities receive dividends - a certain percentage of the issuer's profit. Ensuring the possibility of issuance and initial sale is the initial purpose of the securities market.
In addition to the initial sale, it was necessary to ensure the possibility of circulation (resale). To solve both problems, the first stock exchanges were created. Over time, the importance of the securities market has grown. The number, scale and equipment of such trading floors increased. Over time, over-the-counter channels for circulating securities appeared, as well as a separate category of bidders. Their goal is not to receive dividends or commissions, but to make a profit by changing the value of the values traded in this market. Such activity is called speculative.
Members
Participants in the securities market are all individuals and legal entities that take part in the organization and regulation of tenders or who make transactions during their conduct. These may include the state. It can not only take part in regulation, but also issue securities, creating a market for government securities.
Since the structure of this area of the economy is complex, and the opportunities are significant, the activities of various participants can have many different directions.
In accordance with the tasks performed and the goals pursued, participants are divided into several main categories.
Organizers
The tasks of ensuring and maintaining functioning are performed by professional participants in the securities market. First of all, such are stock exchanges. Their main task is the organization and holding of tenders.Including - ensuring the functioning of their buildings and equipment, disseminating the necessary information, assisting bidders (for example, advising new customers, bringing together counterparties, and so on). Another category of organizers provides over-the-counter services.
An equally important task that organizers perform as professional participants in the securities market is its regulation. Stock exchanges ensure the performance of deliverable and monetary obligations that arise during trading between their participants. In addition, they establish additional rules that protect the interests of the parties, optimize the course of bidding and perform other functions, and also monitor the rigorous implementation of these rules.
In addition to these tasks, there are others related to the storage of securities, their accounting and settlement between sellers and buyers. These tasks are performed by depositories, registrars and clearing centers, which also apply to the organizers.
Intermediaries
Also refer to professional members. But the organization and regulation of the securities market are not within their competence. They give the parties additional opportunities to complete transactions. Namely, they can perform them themselves, on behalf of or on behalf of the parties and at their own expense or on their own behalf and at their own expense. Depending on this, intermediaries may be called brokers or dealers, for the implementation of their activities they receive the appropriate licenses.
Issuers
Issuers are participants in the securities market, issuing them to attract investor capital. It is they who carry out the placement of values of this type and their initial sale on stock exchanges. By issuing and placing, they assume the obligation to pay dividends to investors.
In some cases, even the states themselves or individual state structures and institutions may act as issuers. This is practiced in many countries to increase the efficiency of maintaining the economy carried out by the state.
Investors
These securities market participants make their purchase in order to further receive dividends. In this case, sellers may be issuers or other actors, such as dealers. Most often, investors buy securities through brokers.
In some cases, investors themselves can act as sellers. They can resell their securities to other investors, usually through intermediaries, less often - on their own. Their ultimate goal can be both the release of their capital, and the change of investment object (if the previous one for some reason is no longer suitable).
Speculators
Their activities in the securities market are not related to investing their capital in issuers and receiving dividends. They make a profit as a result of buying more expensive securities and their subsequent resale to investors or other speculators at an increased price. In the role of such can be both private traders and various organizations.
Speculative actions can bring huge profits to such participants. But the risk with which such activity is accompanied is just as high. The securities market is unstable, and it is impossible to correctly predict the change in the price of an asset. Nevertheless, every day a lot of new people come to the stock market who want to try themselves as speculators.
Regulation
The securities market is regulated by its organizers directly, and by the state at the legislative level. The effectiveness of this task is extremely important. Each market participant must be sure that its counterparty will fulfill its obligations in accordance with the terms of the transaction.Without reliable regulation, there can be no confidence in the results of actions.
The regulatory methods used by the organizers are quite diverse. In addition to the generally accepted rules, each trading platform may establish additional ones at its discretion. They may be associated with the registration of participants, confirmation of the possibility of fulfilling obligations to the counterparty, and so on.
It is worth noting that in different countries the responsibilities of regulating the stock market can be distributed differently between its organizers and the state. Some governments prefer to have full control over the process, while others prefer to take on as few obligations as possible, allowing for self-regulation.
