The Financial Markets

PLEKHANOV RUSSIAN UNIVERSITY OF ECONOMICS

INTERNATIONAL BUSINESS SCHOOL 

Finance

Course work

« The Financial Markets »

                                                                                                        Student:

                                                                                    Group №                                            

                                                                                              Supervisor:

Moscow

Table of content

Introduction

Chapter 1

1.1    Concept of financial market.

1.2    Stock market structure.

1.3    Classification of securities and their property.

Chapter 2

2.1 Features of stock market in Russia.

2.2 The market of government securities.

2.3 The market of corporate securities.

Chapter 3

3.1 Prospects of the international financial market.

3.2. Prospects of the Russian financial market.

Conclusion

The list of literature

Introduction.

The financial market represents very difficult mechanism which isn't described yet by any theory up to the end. And despite some uncertainty and set of methods of market research, share values – "goods" most attractive for today for set of investors. By means of financial markets the interbranch, international modulation of capitals is performed. Mechanisms of these markets are in this respect much more effective than direct investment of means and allow to optimize structure and dynamics of public reproduction. And though many economists try to confute from time to time it, this statement has already passed testing by time.

The purpose of the given work is illumination of the basic theoretical aspects financial and mostly stock market, studying of the Russian features, conditions of both sectors of the market – the state and corporate securities, and also attempt of the summary forecast and an estimation of prospects of the Russian market in interdependence in the international stock market on the basis of forecasts of specialists of analytical agencies, the international credit organizations and specialists of Ministersv of economy and the finance of the Russian Federation.

Chapter 1.

1.1     Concept of financial market

The financial market consists of a money market and the market of capitals. It is caused by different character of the financial resources serving basic and a working capital. On the money market the means address providing short-term loans move. In the market of capitals there is a movement of long-term accumulatings.

In financial market the stock market functions. The securities, which value should be determined by assets, are the object of trades in the financial market. The security market serves both a money market and the market of capitals. But securities serve only a part of movement of financial resources (except them there are inter-firm credits and inter-company credits, direct bank loans, etc.).

Thus, the financial market consists of two parts - of a money market and the market of capitals. The stock market entering into its structure is a segment of both these markets. Movement of means on financial market has a direction from savers to users. By means of financial market the modulation of financial resources from one sectors of economy in others can be performed. In total allocate 4 sectors: households, business concerns, public sector and financial intermediaries. The most part of the capital of house economy is formed at the expense of own means. Here the basic excess of financial resources directed on financing of business concerns is formed, the states and takes place at financial institutions (investment funds, banks etc.). The greatest requirement for financial resources is tested by the largest sector – the state. It is the largest borrower on financial market, but also acts as the largest creditor of households, business concerns and financial intermediaries. Intra-sector movement of means takes place also. However these monetary flows are repaid since finally the sum of savings (financial assets) is equal to the sum of investments (financial liabilities).

Dwelling upon stock market, it is necessary to note such process, as securitization. Its essence consists in increase of a role of securities as means of increase of efficiency of attraction of financial resources: low-liquid assets are transformed to securities and offered investors. It allows to do without credit intermediaries (banks) and to involve resources much cheaper and faster.

Thus, the stock market arises from objective necessity of attraction of additional financial resources for the enterprise, corporation, the state. At the same time there is a number of persons (both legal, and physical), having temporarily free money funds. In stock market there is a purchase and sale of financial resources. The stock market plays a considerable role in system of market relations which can be reduced to following factors: 1) attraction of available assets in the form of investments for production development, 2) provision of a modulation of the capital from fading industries in quickly progressing industries, 3) attraction of means for a budgeted deficit covering, 4) generation of indicators on which it is possible to estimate state of the economy as a whole, 5) influence on change of inflation rates.

1.2     Stock market structure

As any market, the security market is a difficult organizational system of law with certain technology of carrying out of operations and the auctions. The stock market consists of three interconnected elements:

       Securities and their derivatives (a trade subject);

       Professional participants;

       Adjustment system.

Considering special character of activity in stock market, the state incurs function of the organization of relations in the market. First of all it means rigid system of the admission of the organizations or physical persons to work in stock market. For professional activity realization in this market it is necessary to obtain the license for the right of work with securities.

In the Russian Federation activity licensing in stock market is performed since 1992. Initially licenses were given out by the Ministry of Finance of the Russian Federation which granted licenses to the investment institutes functioning in stock market in quality: the intermediary (the financial broker), the investment adviser, investment company, investment fund. Simultaneously the Ministry of Finance was performed by licensing of activity of stock exchanges and share departments of commodity exchanges.

In process of stock market development there was a necessity for creation of the special body regulating activity in stock market. The Federal service on financial markets at the Government of the Russian Federation became such body. According to acting order, licensing is assigned to Federal service on financial markets: activity of management companies of share investment funds and registration of their prospectuses of issue, activity of the specialized registrars performing conducting of shareholder registers, broker and dealer, and also depositary, clearing and activity on the securities trading organization.

It is necessary to notice that except professional participants of stock market on it the great number of the institutional investors possessing considerable financial resources which, getting on the market in many respects works determine a situation on it. It is possible to carry banks, non-state pension funds and the insurance companies to such participants.

1.3    Classification of securities and their property

According to clause 142 of the Civil Code of the Russian Federation the security is understood as the document certificating with observance of the established form and obligatory requisites property rights, realisation or which transfer are possible only at its presentation. Thus it is necessary to consider that the presentation in this case is understood not simply as demonstration of availability of the physical carrier of a security, and the proof of ownership rights on a security. But from the point of view of the theory of stock market this determination of a security cannot be recognised by optimum as does not consider all its properties.

For more total characteristic of a security it is necessary to consider its basic properties:

       The security testifies to an ownership right on the capital (shares);

       The security reflects loan relations between the investor (the buyer of a security) and the emitter of this paper (the bond, the bill, etc.)