Glamor Economics

Chapter 177

Chapter 22 Section 6 The main part of the financial market system - the securities market

The securities market is an important part of the modern financial market system, mainly including the stock market, bond market and financial derivatives market.In the modern market economy, the securities market plays an increasingly important role.

From an economic point of view, the securities market can be defined as a trading mechanism that determines the price of securities based on the relationship between supply and demand through free competition.In a developed market economy, the securities market not only reflects and regulates the movement of monetary funds, but also has an important impact on the operation of the entire economy.

In fact, the emergence of securities has a long history, but the emergence of securities does not indicate the emergence of the securities market at the same time. Only when the issuance and transfer of securities are publicly passed through the market, the securities market will appear.Therefore, the formation of the securities market must have certain social conditions and economic basis.The emergence of joint-stock companies and the deepening of the credit system are the basis for the formation of the securities market.

The securities market is an inevitable product of the development of commodity economy and socialized mass production.With the further development of productive forces and the increasing socialization of the commodity economy, capitalism has transitioned from the stage of free competition to the stage of monopoly, and relying on the original bank loan capital can no longer meet the needs of huge capital growth.In order to meet the needs of socialized mass production for capital expansion, a new means of raising funds is objectively required to meet the needs of further economic development.In this case, securities and securities market came into being.

The establishment of joint-stock companies provides the necessary conditions for the formation of the securities market.With the further development of productivity and the expansion of production scale, the traditional sole proprietorship and feudal family business can no longer meet the needs of capital expansion, so a partnership organization has emerged, and then evolved from a pure partnership organization to a joint-stock enterprise - joint stock company.Joint-stock companies raise funds from the public by issuing stocks and bonds to achieve capital concentration and meet the rapid growth of capital needs for expanded reproduction.Therefore, the establishment of joint-stock companies and the issuance of company stocks and bonds provide a solid foundation for the emergence and development of the securities market.

The development of the credit system has promoted the formation and development of the securities market.Due to the development of the modern credit system, credit institutions have developed from a single intermediary credit to direct credit, that is, direct investment in enterprises.Financial capital gradually penetrated into the securities market and became an important pillar of the securities market.Credit instruments generally have the requirements of circulation and realization, and securities such as stocks and bonds have strong liquidity, and the securities market just creates conditions for the circulation and transfer of securities.It can be seen that the more developed the credit system is, the more likely it is to mobilize more members of the public to convert monetary income into monetary capital and invest in the securities market.The rise of the securities industry also opened up broad prospects for the development of the modern credit system.

The securities market is the product of the development of the market economy to a certain stage, and it is a market created to solve the contradiction and flow of capital supply and demand.Therefore, the securities market has three basic functions:
1. Financing

Financing is the primary function of the securities market, and another function of this function is to provide investment objects for suppliers of funds.Generally speaking, there are two channels for corporate financing: one is indirect financing, that is, obtaining funds through bank loans; the other is direct financing, that is, issuing various securities to pool idle funds from society into long-term capital.The former provides short-term loans, which are suitable for solving the problem of insufficient working capital of enterprises, while long-term loans are limited in quantity and harsh conditions, which are not good for enterprises; the latter makes up for the shortcomings of the former, making socialized large-scale production and large-scale operation of enterprises an important aspect. possible.

2. Capital pricing
The second basic function of the securities market is to determine prices for capital.Securities are the existence form of capital, and the price of securities is actually the price of capital represented by securities.The price of securities is the result of the interaction between the supply and demand of securities in the securities market.The operation of the securities market has formed a relationship between the competition of securities demanders and the competition of securities suppliers. The result of this competition is: the capital that can generate high investment returns will have a large market demand, and the corresponding securities prices will be high; The price is low.Therefore, the securities market is a reasonable pricing mechanism for capital.

3. Capital allocation
Securities investors are very sensitive to the income of securities, and the rate of return of securities depends on the economic benefits of enterprises to a large extent.In the long run, the securities of enterprises with high economic returns have more investors, and such securities are actively traded in the market.On the contrary, there are fewer and fewer securities investors in enterprises with poor economic returns, and the transactions in the market are not vigorous.Therefore, part of the funds in the society will automatically flow to enterprises with good economic returns and stay away from enterprises with poor returns.In this way, the securities market guides capital to flow to enterprises or industries that can generate high returns, so that capital can generate the highest possible efficiency, and then realize the rational allocation of resources.

[links to related words]

Negotiable securities A certificate of ownership or creditor's rights with a certain face value, which proves that the holder has the right to obtain a certain income on a regular basis, and can be freely transferred and traded, usually referred to as securities.The main forms are stocks and bonds.Among them, bonds can be divided into corporate bonds, national bonds and real estate mortgage bonds.Marketable securities themselves have no value, but they can be freely traded and circulated in the securities market because they can bring certain dividends or interest income to the holders.

A securities firm is a financial institution established on the securities market approved by the securities regulatory authority to operate agency securities issuance business, agency securities trading business, self-operated securities trading business, agency securities repayment of principal and interest, and dividend payment.It mainly consists of legal entities.Securities dealers can be divided into two categories, one is securities dealers in the securities issuance market and belongs to securities underwriters; the other is securities dealers in the securities circulation market and belongs to securities brokers.Securities brokers can be divided into two categories: securities dealers in the stock exchange and securities dealers in the over-the-counter market.

A securities broker refers to a securities firm that accepts customer orders to buy and sell securities on the stock exchange, acts as an intermediary between the two parties and collects commissions.It can be divided into three categories: commission brokers, two dollar brokers and bond brokers.

The stock exchange is a place provided for the centralized bidding and trading of securities. It is divided into two types: one is a "membership" non-profit legal person, and the other is a "corporate system" for-profit legal person.Our country adopts the former.

The China Securities Regulatory Commission is the abbreviation of the China Securities Regulatory Commission and is an important part of my country's securities regulatory agencies. In October 1992, my country formally established the State Council Securities Regulatory Commission (CSRC) and the China Securities Regulatory Commission (CSRC).The China Securities Regulatory Commission conducts unified macro-management of the national securities market. The China Securities Regulatory Commission is the administrative body of the China Securities Regulatory Commission.

The Securities Association of my country is a self-disciplined securities management organization established in China.It is a corporate legal person established after being approved by the People's Bank of China and registered with the Ministry of Civil Affairs in 1990. It is a national securities industry self-regulatory organization voluntarily formed by the main members of securities business institutions.

(End of this chapter)