Market Infrastructure

The effective functioning of the modern market is directly dependent on a constantly replicating market environment. Its important element is market infrastructure. It is a system of enterprises and organizations that provide the movement of goods, services, money, securities, labor. Such institutions include exchanges, banks, dealers and brokerages, employment services, information and commercial, wholesale and supply and distribution organizations, rental and leasing points.

Commodity Exchange

The word “exchange” comes from the Latin “bursa” which means “wallet”. Exchanges appeared in the XV-XVI centuries. in Italy, the Netherlands, France. In Russia, the first exchange appeared in 1703. in St. Petersburg. In 1705. a separate room was built for her. The stock exchange appeared in Kiev in 1865.

In the contemporary economic literature, commodity exchange is considered, first, as an economic category, reflecting an integral part of the market, which is a specific wholesale form of trade in goods with certain characteristics: mass, standard, interchangeability. Secondly, it is an economic association (society) of sellers, buyers, and resellers in order to create conditions for trade, facilitation, acceleration and cheapening of trade transactions and transactions.

Exchange members benefit not from its operation, but from their participation in the auction. The members of the commodity exchange, in accordance with the established exchange rules, conclude the purchase and sale of goods at prices, which are drawn directly during the trade, depending on the ratio of supply and demand for them. This indicates that the exchange is a special pricing mechanism. This is also the purpose of the exchange.

Describing the different aspects of the commodity exchange, we can give the following generic definition: Commodity Exchange – an association of legal and natural persons, which conducts wholesale trading by standards, samples in a special place where prices for goods are formed in a free competition.

The Exchange, as a segment of the common market, performs the following functions: balancing supply and demand through open sales, streamlining and unifying the market for commodities and raw materials; stimulation of market development; economic indicator.
In advanced market economies, commodity exchanges generally function as nonprofit associations exempt from corporate income tax.

Stock Exchange

The organizational form of the market in which securities, bonds, bonds, state treasury bonds, certificates, documents related to the movement of credit resources and currency values ​​are traded is called the stock exchange.

Unlike commodity exchanges that regulate the movement of goods, the stock exchange provides for the movement of capital, because securities are nothing but different forms of its equivalent. The acceleration of the movement of capital contributes to the efficiency of the stock market economy.

The Stock Exchange facilitates the acquisition of free money under certain conditions and for a certain period of time, raising funds through the issue and sale of shares, bonds and directing them to the technical renewal of the enterprise, its reorientation towards the production of the highest demand. The exchange can facilitate the transfer of capital from one industry to another, and through state regulation of these processes it can be directed to those socially important areas that need it most.

As a secondary securities market, the stock exchange facilitates the transfer of stock values ​​from one entity to another. In the primary market, values ​​are issued, that is, released and distributed to investors. In some cases, securities may be traded on exchanges.
Issuers of securities may be legal entities, the state, state bodies, foreign legal entities.

Citizens or legal entities that buy securities on their own behalf and at their own expense are investors. Another participant in the securities market is an investment institute, which is granted the right of a legal entity, which enables it to perform the functions of an intermediary (financial broker), investment consultant, investment company, investment fund.

Investment companies may arrange for the issue of securities and issue guarantees for placement in favor of third parties, invest in securities on their own behalf and at their own expense, including through the quotation of securities for which the investment company undertakes to sell them and buy.

Exchanges can be classified according to different criteria. Based on the organizational structure, there are two main types of exchange: public-law institutions and organized in the form of private companies and associations with a variety of specific legal forms (joint stock companies, associations, joint ventures).

The stock exchange is a non-profit organization, does not pursue profit-seeking goals, is self-supporting, does not pay income to its members. The financial activities of the stock exchange may be carried out by the sale of shares of the stock exchange that entitle it to be its members, regular membership fees, stock exchange fees for each transaction made on the stock exchange.

The operation of the exchange is inextricably linked to the mediation system and to such entities as intermediaries.

Banks

Banks are enterprises that act as intermediaries in the execution of payments and credit transactions between economic entities. As legal entities, they are economically independent of public authorities in decisions related to their operational activities, and operate within the limits of current legislation.

The bank’s capital consists of two parts: the bankers’ own capital and the attracted in the form of deposits.

Banks are involved in attracting free funds and lending to business entities through banking operations. Banking income is generated mainly by the difference between the amount of interest on loans and those that banks pay to depositors. Banking income also includes the income that banks receive from stock exchange transactions, equity loans, and the like.

The banking system includes different types of banks.

  • Commercial banks accumulate cash in the form of deposits, as well as by issuing their own securities. They lend to business entities.
  • Issuing banks issue (issue) banknotes, mobilize cash reserves of commercial banks, store gold and currency reserves of the state. They provide loans to commercial banks and the state.
  • Mortgage banks provide loans for mortgages of real estate (land, buildings) to landowners, peasants, homeowners.

Banks are different in clientele, use of funds and some operations, but they are all centers that focus on borrowing capital.

Non-Bank Financial Institutions

Non-bank lending and financial institutions are widely represented in the world practice. These include investment, financial funds, pawnshops and credit cooperatives. Deposits by credit institutions, as well as other banks’ clients, can be current (on demand) and term deposits.

A trading house is a multi-purpose entity that exports and imports virtually any commodity, exchanges it, and transports and other foreign economic transactions.

An important element of the market structure is the labor market.

Labor Exchange is an organization specializing in the mediation of workers and entrepreneurs for the purpose of buying and selling labor. Without eliminating unemployment altogether, labor exchanges streamline hiring by businesses and reduce citizens’ job search time. In the case of an unemployment insurance system, the labor exchange also performs the functions of controlling the establishment, entitlement to unemployment benefits and loss of benefits.

Labor exchanges can take many forms: bureaus, offices, partnerships, etc. Depending on the forms of ownership, the following main villas are distinguished: private, operating on a commercial basis; philanthropic; public and state. Labor exchanges, in addition to employment for the unemployed, usually provide services to other people wishing to change jobs, study labor supply and demand, and collect information on employment levels by occupation and territory.

The competence of the labor exchange also includes the professional orientation of young people, the sending of young people to courses for the acquisition of the profession. Organizations of retraining and employment of persons with disabilities are of great importance.