Securities Market

Securities market is an economic institute within which take place sale and purchase transactions of securities between subjects of economy on the base of demand and supply. Also we can say that securities market is a system of interconnection between all participants (professional and nonprofessional) that provides effective conditions: to buy and sell securities, and also

  • to attract new capital by means of issuance new security (securitization of debt),
  • to transfer real asset into financial asset,
  • to invest money for short or long term periods with the aim of deriving profit.
  • commercial function (to derive profit from operation on this market)
  • price determination (demand and supply balancing, the continuous process of prices movements guarantees to state correct price for each security so the market corrects mispriced securities)
  • informative function (market provides all participants with market information about participants and traded instruments)
  • regulation function (securities market creates the rules of trade, contention (споры) regulation, priorities determination)

Specific functions of the securities market

  • Transfer of ownership (securities markets transfer existing stocks and bonds from owners who no longer desire to maintain their investments to buyers who wish to increase those specific investments. There is no net change in the number of securities in existence, for there is only a transfer of ownership. The role of securities market is to facilitate (облегчать) this transfer of ownership. This transfer of securities is extremely important, for securities holders know that a secondary market exists in which they may sell their securities holdings. The ease with which securities may be sold and converted into cash increases the willingness of people to hold stocks and bonds and thus increases the ability of firms to issue securities)
  • Insurance (hedging) of operations though securities market (options, futures, etc,..)

Read more about Securities Market:  Main Financial Instruments, Professional Participants

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Famous quotes containing the word market:

    Have you not heard of that madman who lit a lantern in the bright morning hours, ran to the market place, and cried incessantly: “I seek God! I seek God!”
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