A market economy involves adhering to certain rules. All trading floors operate under the influence of supply and demand. This is true for different types of exchanges. However, each of them has its own characteristics of the mechanism of functioning and organization.
To navigate the principles of work of such organizations, it is necessary to consider all possible types of exchanges. They are classified according to different principles. This allows you to look at their principle of work from different angles. It’s easier to understand the rules of organizing their activities.
General Exchange Concept
The exchange is a financial organization that performs intermediary functions between buyers and sellers of various types of goods. The need for the emergence of such sites is explained by the importance of monitoring the legality of various transactions, as well as fully fulfilling all the obligations of participants in trade relations.
Today, the main types of exchanges were formed as a result of the interaction of many factors of this system. To correctly understand the structure of such organizations, a certain classification is applied. It groups existing types of resellers according to various criteria. So the mechanism of their functioning is revealed more fully.
Signs of classification
There are several signs by which exchanges are collected in certain groups. Some of them are more popular. But you should consider all types of exchange classification. The main of these classifications:
- the role of the state in organizing the work of the exchange;
- type and composition of goods;
- legal organization;
- bidders;
- place in international trade;
- field of activity;
- the prevailing variety of transactions.
The most popular classification is the grouping by type of product. On this basis, commodity, currency and stock exchanges are distinguished.
The type of ownership distinguishes between public, private and mixed varieties. According to the form of participation of visitors, resellers can be open or closed. There are also international and national organizations of this type. By the nature of the transactions concluded, exchanges can be optional, futures, real goods or mixed.
Types of values
All types of exchanges participate in the circulation of various values. These include a list of goods.
- Securities (stocks, bonds, bills, etc.).
- Products of the main consumer demand (food, materials, raw materials).
- Minerals (gas, oil, coal, ore, etc.).
- Precious stones and metals (diamonds, gold, silver, platinum).
- Currency of different countries.
- Intellectual property.
- Debt obligations of the state, large corporations.
- Freight documents, insurance liabilities for goods.
- Information Technology.
The exchange administration monitors the exact implementation of all transaction conditions, regardless of the form of values that are traded on the trading floor. This is its main purpose.
Exchange Features
All exchanges carry out fixed activities. The activities of the exchanges are as follows:
- Providing a place for tendering. If this is an electronic type of organization, then the meeting of the seller and the buyer occurs on the site or using special programs.
- Conducting exchange operations between participants.
- Standardization of goods, setting trading rules.
- Support in the field of trade.
- Setting the price, which deals with a special quotation committee.
- Settlement of contentious issues.
- Providing all the necessary information for participants.
- Guaranteed payment between buyer and seller.
Performing the functions assigned to it, the exchange takes a fee from bidders.
Currency exchange
All existing types of currency exchanges are part of foreign exchange market. Here is the purchase and sale of national currency units according to their quotes.
Its main task is the redistribution of finances between different sectors of the economy. This organization also sets the exchange rate. Today there are many electronic systems. At a distance, participants offer their written applications for concluding a contract, which are called offers.
This approach allowed an unlimited number of participants to bid. Therefore, today the currency exchange connects residents from various countries. Bidding is therefore conducted around the clock, and the number of independent organizations setting quotes has increased.
The speed of transactions has increased greatly, and the information alert has become better. Electronic bidding needs less funding. This gives them a definite advantage.
Commodity Exchange
The modern commodity exchange is a non-profit organization in which members of international corporations participate. In the public market, the sale and purchase of goods.
All types of commodity exchanges contribute to the formation and control of supply and demand. This prevents a shortage or accumulation of surplus raw materials.
This association hedges (insures) participants from price fluctuations unfavorable to them. Also one of the functions of the commodity exchange is the delivery of material assets and the consideration of disputes, claims.
Standardization is carried out in the field of products and documentation.
Stock Exchange
The main purpose of the existing types of stock exchanges is to conduct activities to bring together representatives of corporations and industries with private investors.
Here, operations are carried out for the sale of shares, bills, bonds. The main activities of the stock exchange are aimed at providing conditions for companies to sell their securities and invest their capital by private individuals.
This contributes to the development of industry, the concentration of a large number of financial resources in the activities of different companies.
Depending on the type of securities, an investor receives certain rights and risks upon purchase. Stocks most often give a vote in the management of the company, and bonds guarantee a fixed income on time.
The higher the risk of non-return of funds, the greater the percentage promised to the investor for the use of his capital. Before buying securities, it is necessary to calculate the probability of making a profit based on information about the company’s activities in previous periods.
The most famous world exchanges
Depending on the type of product that is traded on exchanges, there are various types of the world's largest organizations.
In the foreign exchange market, the most famous organizations of the type represented are Carrinex, Forex, Atriax. The first activity begins in 1999.
Forexall and Atriax began their work in 2001. Their participants are the largest banks, treasury departments, organizations and government departments around the world.
Modern types of financial exchanges make profit from the use of private capital.
The largest types of world-class stock exchanges are New York, London, Tokyo, Vienna, Frankfurt, and this list also includes the US electronic stock exchange and Euronext. The maximum profit in this case can be obtained mainly by large companies.
The most famous commodity intermediaries are the Commodity, New York, Mid-American and International Petroleum Exchanges.
Types of transactions
The types of transactions on the exchange determine another popular classification of these organizations. According to this characteristic, there are distinguished intermediaries in trading in real goods, futures, options or mixed varieties.
In the first case, values are not present in the exchange process. The transaction occurs only according to the description of the goods. Its movement is carried out by the exchange. This is the oldest form of organization.
Other varieties are more common today. Futures exchanges exchange the rights to a commodity, not its material expression. Moreover, transactions are concluded in most cases virtually through the Internet or special programs.
Option exchanges function to enhance participant insurance. This allows them to limit their losses in transactions of sale.
Many exchanges have the ability to conclude all types of transactions. In this case, they are called mixed.
Having examined the main types of exchanges, we can conclude that there are different signs of their classification. The most popular principle of grouping is the association of these intermediaries by type of product. It is most often used in the global definition of the type of exchanges, indicating a number of characteristics and features of such associations. This allows you to clearly understand the functions, types of activities of resellers, as well as their purpose. Modern technologies take their activities to a whole new level. Today, trading on all types of exchanges is more optimized and opens up a lot of prospects for future development.
