Determination of the securities market and its types презентация

Contents:
1. Determination of the securities market and its types
2. Functions of the securities market
3. The structure of the securities market
4. Types and models of legal regulation of the stock market

1. Determination of the securities market and its types
Stock Market - is a set of economic relations over the issue and circulation of securities among its participants.
Kinds of securities markets:
- International and domestic securities markets;
- National and regional markets;
- Markets for specific types of securities (debt and equity);
- Markets for government and corporate securities;
- Markets of the primary and derivative securities.

Capital investment is depending on many factors:
- The level of profitability of the market;
- Terms of regulation and taxation;
- The level of risk as the probability of loss of capital or non-receipt of expected income;
- The perfection of market organization and working conditions of participants, especially investors.

Primary market & Stock market
Markets, where you can only invest, or the primary market.
The process of distribution and redistribution of financial resources, capital is carried out on the market of financial resources, the stock market (Fig.1).
Temporarily free funds received for the financial markets, which provide the possibility of their redistribution in different forms.

Market of financial resources
Credit market
Currency market
Tangible assets market
Securities market
Debt market
Instruments of ownership market
Market for derivative instruments
Cash resources market
Market of financial resources

Credit market
The credit market - a mechanism for the relationship between legal entities (enterprises, state), which require funds for its development and operation, on the one hand, and the businesses and citizens on the other hand, who can give (lend) the funds.
Credit market possibilities:
- Integration of small and large funds from various individuals and entities as a base for cash funds;
- Transformation of these funds in debt capital for investment;
- The granting of loans government agencies, businesses and the public.

Currency market & tangible assets market
Currency market - a mechanism for organizing economic and legal relationships between consumers and sellers of currencies, the state organs are the regulators of the market, engaged in buying and selling currencies.
Conversion operations are called transactions in the currency market to exchange a specified amount in one currency for funds in another currency at an agreed rate on a specified date.
The market, which are bought and sold various material or real resources - tangible assets market or commodity markets (various food and commodity exchanges)

Cash resources market & Debt market
Cash resources market operates primarily in the form of banking credits to cover the relations arising on the provision by credit institutions repayable loans and paid relating to the design of special documents, which can not be sold, bought or redeemed.
The issue of bonds as the debt is usually carried out with pre-fixed and pre-negotiated terms of the full debt plus interest. This operation is performed on the debt market.

Instruments of ownership market & Derivatives market
Attraction of additional owners of the funds through the sale for each new shareholder of a certain number of shares, which certifies the right to own a certain percentage of stock company assets. This operation relates to the instruments of ownership market.
The market, which are converted to derivatives securities (options and futures) is the market for derivative instruments or derivative securities (derivatives). Derivative securities - are instruments whose value is determined by the value of certain assets, called the base.

Securities market & Securities
Securities market includes part of a credit relationship (bond market) and the relations of co-ownership (stock market).
Securities - financial documents that indicate ownership, or loans, determine the relationship between the person who issued them and their owner, and provide, as a rule, the payment of income in the form of dividends or interest, as well as the possibility of transferring money and other rights that derived from these documents to others.

2. Functions of the securities market
General market functions:
- Business function, function of getting profit from operations in this market;
- Price function, market provides a process of folding of market prices, their constant movement;
- Information function, market produces and brings to its members information about the objects of trade and its participants;
- Control function, market creates the rules of trade and participation in, the procedure for settling disputes between the parties, establishes priorities, control bodies, or even control.

Specific functions:
Besides the market functions inherent any market (price, information, commercial, regulating), the equity market executes two specific functions:
1) the redistributive. it means:
Redistribution of money resources between branches and lines of business;
Transfer of savings from unproductive in the productive form;
Public finance financing on not inflationary basis, that is without issue in the circulation of additional money resources.
2) insurance of price and financial risks (hedging) which became possible thanks to occurrence of a class of derivative securities (in particular options and financial futures).

3. The structure of the securities market
Depend on the way of trade in this market there are such markets:
- Primary and secondary;
- Organized and unorganized;
- Stock and out stock;
- Traditional and computerized;
- Cash and term.

Primary market & Secondary market
Primary market - a market first and re-issues (issues) of securities, on which their initial placement among investors.
The main task of the primary market is to minimize the risks of investors.
Secondary market - this circulation previously issued securities, change of ownership.
Thus there is a regulation of market prices, spontaneously and constantly changing market conditions.
The main objective is to provide liquidity of securities, creating the conditions for trade, the conditions for rapid implementation of securities by the owners at the prices in the market.

Organized securities market - their circulation on the basis of firm rules between licensed professional intermediaries – by the market participants on behalf of other market participants.
Unregulated market - is the circulation of securities without compliance with the uniform for all participants of the market rules.
Stock Market - a trading of securities on stock markets. This is the organized market with the maximum level of control and regulation.
Outstock market encompasses securities transactions outside the stock exchange.

Traditional & Computerized Cash & Term Markets
Securities trading may be carried out on traditional and computerized markets.
Computerized market characterized by:
Lack of physical place where buyers and sellers, and therefore, the lack of direct contact between them;
Full automation of the trading process and its services, the role of market participants is reduced mainly only for delivery of their bids for the sale of securities in the trading system.
Cash market securities (spot market) - is a market with immediate execution of transactions, with full implementation of transactions (delivery versus payment) for 2 or 4 working days.
Term Market - a market in which transactions have the term of execution more than 4-5 working days. Most of the terms of execution for 3 months.

4. Types and models of legal regulation of the stock market
World standards of the stock market have been worked out by "Group of Thirty" - non-governmental experts on the organization of the international financial system.
The purpose of standards - reduction in time between the transaction and its implementation, as well as guaranteeing the performance of the contract. Recommendations:
- All transactions by securities carried out on the principle "delivery versus payment";
- Verification of all conditions of the parties made not later than the day after the transaction (T +1);

- Agreements executed not later than
2 business days after the conclusion of (T +3);
- Cash payments are the same for all transactions procedures;
- Savings of securities are implemented by a single central depository;
To account documents on transactions with securities and numbering used standards of the International Organization for Standardization

Security markets regulation is concerned with overseeing the circulation of information about securities that are traded, monitoring the market for the abuse of information or financial resources to manipulate market and prices and supervising the corporate governance of organized markets.

Legal Regulation of Securities and Stock Market in Ukraine
The EBRD’s 2008 Law in Transition reports that Ukraine’s securities legislation was in “high compliance” with the Objectives and Principles of Securities Regulation established by the International Organization of Securities Commissions (IOSCO). Since then Ukraine has adopted the Joint-Stock Companies Act and other regulations improving the legal framework in the area of securities even further. Nevertheless, as with many other laws in Ukraine, the practical application of the laws and regulations is rather far from perfect.

The Securities Commission is the main regulator of the Ukrainian security market. The Security Commission is a state authority subordinated to the President of Ukraine and accountable to the Verkhovna Rada (the Ukrainian Parliament). It is responsible for developing and implementing uniform state policy on the functioning of the Ukrainian securities market as well as monitoring the compliance of all Ukrainian securities market participants with Ukrainian securities legislation. The Security Commission has the power to apply sanctions against parties.

Types of legal regulation
General allowance: it is based on the whole allowance, from which we take exclusions in the form of prohibitions. Its formula – everything is allowed, except that ones, that are directly prohibited.
General permission: it is based on the whole prohibition of some kind of action, but in the individual order some prohibited behavior can be allowed. Its formula – everything, except directly permitted, is prohibited.

How the U.S. Stock Markets are Regulated
Stock markets of different countries have different operating model , its own rules and system of government. But despite their differences, the organizational structure of the system of regulation in the vast majority of states , based on the concept of two-tier system of regulation.

Regulatory system
The organizational structure of the regulatory system based on the concept of a two-level system of regulatory authorities. The first level - regulatory agencies, the second - self-regulatory organizations (SROs), created by professional securities market participants. These include various kinds of unions, associations, leagues of professional participants, stock exchanges and the organizers of the outstocks trade.
In almost all countries the investment business is highlighted in a special area of economic legislation and administrative oversight.

Two main models for regulating the securities market
The first model - the regulation of the stock market is mainly concentrated in government and only a small part of the authority to oversee, control , establish binding rules of conduct passed state SRO professional market participants. This approach is used in the United States and France.

The second model - the maximum possible amount of powers transferred CPO important in controlling not take tough regulations and the negotiation process , the individual agreements with professional market , while the state reserves the basic control functions , the ability to intervene at any point in the process of self-regulation . An example of such a model is the United Kingdom.

From more than 30 countries with developed securities markets more than 50% are independent agencies ( Commission on Securities and Exchange Commission - the U.S. model , the Bureau of Securities - Japan, the Federal Office for Banking Supervision - Germany , the Council for Securities and Investment - UK Commission on exchange transactions - France , the Commission on securities and stock Exchange and the Supervisory Board of the Securities - Korea) , about 15 % of the countries in the stock market is the Ministry of Finance.

Ukrainian regulatory system
In Ukraine, the regulatory system of the stock market took two stages. The first phase (1991 -1995 years.) Characterized by the fact that the main regulatory authority of the state was the Ministry of Finance.
The second phase began in 1995 when the Presidential Decree “About the State Commission on Securities and Stock Market” was adopted.

The State Commission on Securities and Stock Market
The purpose of the State Commission on Securities and Stock Market is the policy-making in the management and development of securities market that would ensure fair trade and competition between traders of securities and ultimately - protect the rights of investors.
Major tasks of the regulatory bodies:
registration of Securities Dealers, as well as those who advise investment
ensuring transparency
maintain law and order in the stock market

Self-regulation
This is primarily Stock Exchange, representing the auction, where the purchase - sale of securities is, by exchanging oral instructions between traders and the prices are formed according to the law of supply and demand.
Another body of industry self-monitoring and self-regulation are a professional association of investment business.
In Ukraine, a similar function is fulfilled by the Association of Securities Dealers.

IN USA
The U.S. Congress is at the top of the heap. It created most of the structure and it passes major laws that affect how the industry operates. It also authorizes budgets for the Securities and Exchange Commission and other agencies involved in regulatory duties.
The SEC is the top regulatory agency responsible for overseeing the securities industry. It registers new securities and handles all the filings that public companies must make, such as annual and quarterly reports.