Securities market (stock market, RZB) in simple words

What is the securities market?

Stocks and bods market (eng. stock market) is part of the monetary and financial turnover of the market. The essence of the RCB is the purchase and sale of securities and their issue.

Stocks and bods market represented by a network of banks, stock exchanges, as well as other specialized financial institutions. Through the RCB, funds are accumulated from individuals and legal entities, as well as from the state. The securities market interacts with the bank credit system.

Usually the securities market and the stock market are identified, but there is a significant difference here: since not all securities are derived from money capital, the securities market cannot be fully attributed to the financial market. In the part in which the RZB is based on money as capital, it is called the stock market and in this capacity it is a part of the financial market.

The stock market forms most of the securities market, the rest is the market for commodity securities (commodity options and futures, etc.). In this way,

Securities market = stock market + commodity securities market.

What is the purpose of the securities market?

The purpose of the securities market is to accumulate financial resources and ensure the possibility of their redistribution by various market participants performing various operations with securities, that is, mediating in the movement of temporarily free funds from investors to issuers of securities.

Who is the participant in the securities market?

Participants in the securities market can be divided into three groups:

  • issuers – persons issuing securities in order to attract the funds they need;
  • investors – persons who buy securities for the purpose of obtaining income, property and non-property rights;
  • intermediaries – persons providing services to issuers and investors to achieve their goals.

What types of securities markets are there?

RCB is divided into primary and secondary:

  • In the primary market there is an issue of securities and their placement.
  • On the secondary market the circulation of securities is carried out.

Depending on the timing of transactions with securities, the securities market is subdivided into:

  • spot market, when the exchange of securities for cash is carried out practically at the time of the transaction;
  • derivatives market, where derivatives contracts are traded.

In addition, the timing is distinguished:

  • short-term securities market – a segment of the securities market where securities with a maturity of less than one year are placed and traded. It represents the bulk of the capital market. Most short-term securities are at the same time payment and settlement or credit instruments (bills of exchange, checks). There are also purely short-term securities – short-term debt obligations of the state;
  • long-term securities market – a segment of the securities market where securities are placed and traded with a maturity of at least one year. It represents the bulk of the capital market.

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