1. Financial market: notion, structure and infrastructure.

Financial Market Structure

FIN STRUCTURE – money market, capital market, infrastructure- all market players, normative documents, government institutions.

FINANCE – безвовзратное движение средств. Однократное.

CREDIT – возвратное, многократное, платное обращение средств.

It’s the budget, non-budgetary funds, insurance companies, other organizations, households. Finance – relationships concerning creation and redistribution of monetary funds.

In economics, a financial market is a mechanism that allows people to easily buy and sell financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect the efficient market hypothesis.

Financial markets have evolved significantly over several hundred years and are undergoing constant innovation to improve liquidity.

Both general markets and specialized markets exist. Markets work by placing many interested sellers in one "place", thus making them easier to find for prospective buyers. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy that is based, such as a gift economy.

Financial markets facilitate:

• The raising of capital

• The transfer of risk

• International trade

They are used to match those who want capital to those who have it. Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends.

Financial markets could mean:

1. Organizations that facilitate the trade in financial products. i.e. Stock exchanges facilitate the trade in stocks, bonds and warrants.

2. The coming together of buyers and sellers to trade financial products. i.e. stocks and shares are traded between buyers and sellers in a number of ways including: the use of stock exchanges; directly between buyers and sellers etc.

Types of financial markets

The financial markets can be divided into different subtypes:

1. Capital markets which consist of:

   • Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof.

   • Bond markets, which provide financing through the issuance of Bonds, and enable the subsequent trading thereof.

2. Commodity markets, which facilitate the trading of commodities.

3. Money markets, which provide short term debt financing and investment.

4. Derivatives markets, which provide instruments for the management of financial risk.

• Futures markets, which provide standardized forward contracts for trading products at some future date; see also forward market.

5. Insurance markets, which facilitate the redistribution of various risks.

6. Foreign exchange markets, which facilitate the trading of foreign exchange.

The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities.

Structure of the financial market – this internal structure defined by interaction and densities of separate units of the market. For the characteristic of structure of the market the various criterions are used.

Objects Distinction

Capital market

• (the share market) is a system of the economic ratioes between theme, who releases and sells valuable papers and theme, who purchases them and becomes their holder.

The market of the credit

• is the system of the money ratioes, which are connected to allocation and return of the loans, organization of money accounts, issue of token moneys and valuable papers, and as by crediting of capital investments.

Exchange market

• it is sphere of the economic ratios appearing for want of realization of operations on a sale and purchase of a foreign exchange and valuable papers in a foreign exchange, and as operations on an investment currency of the capital.

The insurance market

• the special socio economic structure which is carrying out creation of demand and purchase

• sale of the obligations of insurance protection.

Subjects Distinction

• Operating sectors: represented by the businessmen, state, home facilities(economy)

• The intermediaries: banks, insurance companies, funds

(in various conditions each of them can appear as in a role of the creditor, and borrower.)

Level of Saturation Distinction

The equilibrum market when demand = to sentence. It is the competitive market.

The scarce market when demand < sentences. It is the market of the sellers.

The redundant market when demand > sentences. It is market of the buyers.

(depending on the considered task can be used and other criterions for the characteristic of structure of the financial market.)

Infrastructure of the financial market – it is a collection of organizational–legal forms, answering for movement (traffic) of objects of the financial market, collection of institutes, systems, services, firms serving the financial markets and ensuring it normal operation. For want of consideration Infrastructure on the foreground there is an interaction Units, and their role in execution of the defined function.

Basic elements of an infrastructure of the financial market:

• Exchanges (share, currency), their organizational made out mediating,

• Auctions, as the form organizational unexchange обмиена,

• The credit system and business banks,

• Issue system and issuing houses,

• The system of insurance of a risk of loss and insurance companies,

• Advertising agencies and mass media,

• The customs system,

• The system maximum and secondary education,

• The consulting companies,

• Auditor corporations,

• Trade unions working on hiring,

• Information technologies,

• Normative - legal base.