WORLD SECURITIES MARKET: STOCK AND CURRENCY EXCHANGE, World...

GLOBAL SECURITIES MARKET: STOCK AND CURRENCY EXCHANGES

Global securities market as part of the foreign exchange market

The concept of the securities market. We note first of all that the currency market as the world's largest financial market plays a key role in ensuring the interaction of various instruments (components) markets. The core of the currency and, in general, financial markets is the securities market. The world securities market is a mechanism that allows transactions between owners of cash and their customers. This market trades in short-term securities (this is the money market) and long-term securities, for example, in the form of bonds and shares.

The world capital market is characterized mainly by the capital market. The world credit market operates in close relationship with the world stock market, which is associated with the movement of long-term capital. Long-term bank loans (up to 10 years), which are provided to foreign countries, this is one of the forms of long-term capital flows. A loan in dollars, euro or in other currencies (depending on markets and transactions) is not an exhaustive form of international credit. Another important means of raising funds is issuing securities. With their help, money is acquired directly from investors, regardless of whether it is a giant multinational corporation or a modest employee who turns a part of his breakfast into securities.

Classification of money ( currency) markets and capital markets. The specificity of the money market is that here short-term operations are carried out from 1 to 365 days; in capital markets - for a period of more than 1 year. There are markets for tradable and non-negotiable instruments. Treasury assets are debt securities (notes, notes, bonds) and equity securities (title deeds, or shares).

The papers issued by the issuer are placed in the primary market, after which they are traded on the secondary market (exchanges). On the stock exchanges, trade is carried out by first-class ordinary shares and convertible bonds that are included in the listing (admission to trading). For example, the listing of the New York Stock Exchange includes more than 2,200 ordinary preferred shares and 950 bonds, convertible into shares. In the electronic market (before the counter), before the global crisis, shares of relatively small companies, corporate bonds and preferred shares, treasury and municipal securities, various money market instruments, including discount, interest-bearing securities, interbank loans and deposits, instruments of the foreign exchange market (spot, forward, options and swaps). The electronic market is rapidly developing, attracting large corporations.

The market for non-revolving loans (deposits) is divided into interbank and client. In addition, international money markets and capital markets are classified according to the currency , through which the transaction is carried out and the place of registration of the transaction (the principle of residency) between the parties is established.

Accordingly, we can distinguish:

1) the domestic foreign exchange market;

2) foreign markets, including offshore;

3) financial markets.

In Fig. 21.1 shows the composition and structure of international markets.

Classification and structure of international money and capital markets

Fig. 21.1. Classification and structure of international money and capital markets

* OTC (over the counter - through counter) "- over-the-counter market.

Securities are legal documents (title deeds) that certify the owner's right to income or property.

They determine the relationship between the issuer (the person issuing securities) and the owners of these securities, which usually provide payment of income in the form of dividends or interest, as well as the possibility of transferring monetary and other rights arising from these documents to other persons. The main stock securities that serve to attract borrowed funds are currently Eurobonds, Euroacts and Eurowebs.

According to the nature of the ownership right , the following types of securities are distinguished:

• bearer securities, for the realization and confirmation of the owner's rights is sufficient

the presentation of a security; These include shares and bearer bonds, bearer checks and entry certificates, simple warehouse certificates (warrants), a bill of lading (document confirming receipt of goods for transportation) to bearer, etc.

• registered securities, the rights of holders of which are confirmed on the basis of the name of the owner entered in the text of the security and entry in the corresponding book of securities registration or on the basis of electronic registration, which the issuer is obliged to conduct in accordance with the requirements of legislation; among registered securities it is necessary to allocate first of all nominal shares, bonds and certificates;

• Order securities, the rights of holders of which are confirmed by the bearer of securities and the presence of appropriate transfer records with signatures and seals on these securities; the most important place among them is occupied by bills.

By the nature of transactions and transactions, and depending on the purpose of the issue distinguish the following types of securities:

• stock - stocks and bonds traded on the stock exchange

• commercial papers serving the commodity turnover process and certain property transactions: bills of exchange, checks, bills of lading, warehouse and mortgage certificates, mortgages.

Stock securities are divided into basic, which indicate the property right or the owner's claim, and subsidiary, containing the additional right, the requirement, the condition, usually associated with the receipt of income (dividend, interest). Subsidiary securities include coupons that give the right to periodically receive income, and coupons that give the right to receive a coupon. Coupons are issued to the bearer, even if the underlying security (share or bond) is nominal. Auxiliary securities, separated from the main ones, can become independent securities and have circulation on the over-the-counter market, i.e. they can not apply on the stock exchange.

Two categories of chain papers are circulating on the stock exchange:

1) bonds - debt securities usually with a fixed interest rate and an obligation to repay the capital amount of the debt to a certain date in the future;

2) shares - securities representing directly the share of their owner in the share capital.

Securities are issued by legal entities: state and commercial organizations. Buyers of securities can be legal entities and individuals. The purpose of issue (issue) of stock securities is to centralize and accumulate funds to increase the issuer's capital (legal entity that issues securities) and finance its activities. The state issues securities also to cover the budget deficit.

Securities are financial assets that are easily sold and bought on the market. The most common securities for borrowing, mainly intended for investment financing, are mainly bonds issued by governments and companies and involving back payments (debt repayment and interest payments). This sector has turned into the largest financial market in the world, especially since the state is particularly widely used as a means of obtaining loans. Managers of large industrial corporations closely monitor the movement of securities, given their courses in the current policy.

Bonds is a type of securities with a solid interest that the state or firms issue as a debt obligation. This is a form of credit with minimal risk. Bonds are sold and bought on the exchange at market prices. They can be issued for up to 10 years (short-term) and over 10 years (long-term).

Bonds are usually divided into foreign bonds and eurobonds. The former are sold outside the borrower's country, but expressed in its currency, and national bonds denominated in foreign currency refer to foreign bonds. The latter are delivered to the market by a syndicate of banks from different countries and are located in countries with a different currency.

Eurobond market. The common Eurobonds traded on international markets are Eurobonds. The main advantage of Eurobonds against traditional foreign bonds is the possibility of their placement in the markets of several countries, and they are less subject to state regulation. These bonds must necessarily be sold in Europe, but their main market is in London. Eurobonds do not have national borders and are realized simultaneously in several financial centers with the intermediation of international syndicates of insurers. Their denomination is set in the currency of another country, including eurodollars and euro-yen. At present, all bonds issued on the Eurocurrency market are called Eurobonds.

Eurobond market is a system of stable debt relations in Eurocurrency, drawn up in the form of debt obligations, where the data on the amount of debt, terms and terms of its repayment, the procedure for obtaining interest are recorded. It is very attractive and accessible to foreign investors. Its main advantages are the absence of tight control by the state, the long-term nature of the loan (10-15 years) and the opportunity to receive funds simultaneously in several countries. Unlike Eurocredits, Eurobonds do not allow their owner to influence the monetary policy of the borrower, i.e. compliance with IMF requirements is observed. Therefore, borrowers with a high credit rating are admitted to the Eurobond market. The interest rate on bond issue may be fixed or floating.

Bonds are issued by local authorities for the purpose of financing social infrastructure, municipal facilities and other municipal programs. These bonds are called municipal bonds. The profitability of this kind of securities for investors is the availability of tax incentives. And in developed countries with a federal structure, they constitute a significant share of the stock market. For the US, this is approximately 25% of the total volume of state and municipal securities, and for Germany - more than half.

Corporate bonds. Bonds are also issued by large companies to attract additional capital for expansion or modernization of production. These so-called corporate bonds as securities are secured by the property of the enterprise. Only large and well-known firms can count on the confidence of the population. Before entering the bond market, a company needs to obtain a conclusion from the specialized agency about its creditworthiness. This depends on the fate of the bonds and the interest rate on them. In order to make obtaining a bonded loan attractive for investors, corporate bonds are issued with different properties:

• indexed bonds;

• bonds with the right to participate in profits;

• convertible into other securities, primarily in shares;

• refundable bonds (redeemed before the end of the loan);

• bonds with floating interest, etc.

The wide choice given to the client allows large companies issuing bonds to strategically target their activities in a purposeful way, preserving the overall stable environment in their field of activity.

The main centers for trading foreign bonds are New York, Zurich, Tokyo, London, Amsterdam, Frankfurt/Main.

The issue of stock securities is characterized by a massive character, indicating their number, the nominal price of each security (shares, bonds) and the amount for which they are issued. Securities of one issue are identical to each other and represent a certain share in the capital, property or bond fund. The issue of stock securities is subject to compulsory registration with the appropriate state body, where each issue of the security is assigned a code.

In countries where stock exchanges have operated for centuries, and since the emergence of exchanges, legal norms have been developed for issuers and investors, there are strict laws that control the issuance and sale of securities. The need for legislative regulation of the issuance, initial distribution and resale of securities was confirmed by the current stock market crises, in particular the world's largest exchange crisis

1929-1933 gg. Its consequence was the adoption in many countries of laws governing the issuance and circulation of securities. In the United States, the issuance procedure is regulated by the Securities Act of 1933. The issuing company is obliged to provide all information about its activities and forthcoming issue of shares or bonds: the current state of affairs, the prospects for obtaining revenues, information on recent transactions, description of previous issues of securities and other information. Special federal (state) bodies verify these data and, if they are complete and reliable, permit the issuance of new shares or bonds. The release data is reduced to special tables and printed in the prospectus.

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