Essence, functions and members of the securities market

ESSENCE, FUNCTIONS AND MEMBERS OF THE SECURITIES MARKET

The securities market can be defined as a set of economic relations in the production and circulation of securities between the participants. In this sense, it is different any other explanation. The basis of the securities market is the commodities market, money, and money capital.

Classification of this market has many similarities with the classifications of themselves and also has differs between them as follows:

• international and national securities markets;

• national and regional (territorial) securities markets;

• markets of specific types of securities (stocks, bonds, etc.);

• government and corporate securities markets ( non-governmental);

• primary markets and derivative securities.

Functionally, the securities market can be divided into two groups: general market and specific. The first group of functions includes:

• commercial is the function of the profit from operations in this market ;

• price, when the market provides the folding process of market prices, their constant motion, etc.;

• information - that is, the market produces and brings to its members market information about the objects of trade and its participants;

• regulating function, when the market makes the rules of trade and participation in, the procedure for resolution of disputes between the parties, sets priorities, control bodies or control, etc.

The specific functions of the securities market are the following:

• redistribution;

• the price of insurance and financial risks.

As for the insurance function of price and financial risk, or hedge, it has become possible with the help of emergence of derivatives - futures and options contracts.

From the standpoint of the method of trade in the securities must provide the following:

• primary and secondary;

• organized and unorganized;

• exchange and OTC;

• traditional and computerized;

• cash and derivatives markets.

The emergence of the securities market is associated with the practice of trade and money-lending operations. They gave birth to the first securities - bills and bills of lading. Its further extension is associated with the emergence of joint stock companies and emission activity of the state. Capital investment in securities on a large scale began in the middle of the XIX century. By this time, the stock market has already received considerable development. Also make a formation of its participants. Initially, they were individuals who acted as traders, individuals and owners of banking houses, then the legal entity. Currently, market participants, who are both issuers and traders, can be divided into several groups.

1. The state, the largest national and international companies with high image.

2. Financial institutions that conduct transactions with securities (commercial and investment banks, insurance companies, pension funds, etc.).

3. Individual investors - individuals, including small business owners business venture.

4. Professional participants of the securities market. Access to information necessary for help them to conduct transactions with securities.

An investor who trusts their cash to a professional participant knows that his assets should be protected from all kinds of risks. The investor does not have to worry about any problems ¬ professional participant.

For professional participants of the securities market include:

1. Trading places:

• exchange. Today we have only Kazakhstan Stock Exchange (KASE), which began its existence in 1997;

• OTC.

2. Sales agents:

• brokers - middlemen is engaged in transactions for the account and on behalf of the client;

• dealers - are intermediaries conducting operations at its own expense and on their own behalf.

Kazakhstan has issued a general license for broker - dealer activities when these intermediaries themselves can determine for itself and for whose account on whose behalf the transaction is committed. In addition, it should be noted that in the world by brokers and dealers could be both legal and natural persons, while in our country the activities of broker-dealers perform only the legal entity.

3. Organizations belonging to the infrastructure of the stock market, which include:

1) Depository - a professional participant of the financial market, acting as the clearing nominee, the paying agent, etc.

2) recorders. Every corporation formed under the laws of the Republic of Kazakhstan shall not later than one month from the date of state registration of securities to provide maintenance and keeping the register of holders of Securities.

The registrar cannot delegate its powers to keep the register or part of any other persons except in cases established by law. Registrar may not acquire ownership rights to securities issuers, maintenance of registers of which he performs;

3) Clearing organizations - professional participants of the financial market, conducting netting of mutual claims and obligations of the parties involved in the transactions in financial instruments;

4) The custodian - professional participants of the financial market, performing accounting and custody of financial instruments and money for clients and supporting them by law with the adoption of a commitment to their preservation. In RK custodians may only banks licensed to custodial activities and safe operations;

5) portfolio manager - professional participants of the financial market, carrying out on their behalf and for the benefit of the customer account activity on management of civil rights.

With any other activity, except in exceptional, can be combined custodian and portfolio management - with a broker, dealer and custodian.

An indispensable condition for any activity in the securities market will obtain state licenses for businesses and for individuals - a certificate of competency of the Agency for Supervision of Financial Market and Financial Organizations.

In 2004, the professional activities in the prices securities in the Republic of Kazakhstan was carried out more than 50 companies, of which 38 got it right at the beginning of 1996 a part of the professional participants of 23 joint-stock banks of the second level .

The institutional infrastructure of the securities market of the Republic of Kazakhstan at the present time is as follows.

	on 1.01.2010 year	on 1.01.2011 year	on 1.01.2012 year	on 1.01.2013 year	on 1.07.13 year
Total broker-dealers, including:	86	76	73	62	57
Banks	24	24	24	24	24
of which category I	22	22	22	22	22
nonbanks	53	47	44	34	30
of which category I	44	39	36	25	21
ETS participants	9	5	5	4	3
Registrars	12	10	10	7	-
Custodians	11	10	10	10	11
The investment managers of pension assets NPF	14	15	14	13	13
Investment portfolio managers	54	39	33	33	30
CPO	2	2	2	2	2
Transfer Agents	3	3	3	2	2
Organizer of the sale of securities	1	1	1	1	1