Интеграция мировых научных процессов как основа общественного прогресса. Выпуск №12. Часть 2

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Литература:

1.Федеральный закон от 10 июля 2002 года N 86-ФЗ «О Центральном банке Российской Федерации (Банке России)».

2.И.А. Продченко «Деньги. Кредит. Банки» часть 2, с.228.

3.[Электронный ресурс]. URL: http://www.bibliotekar.ru/kodex-11-11/151.htm

4.[Электронный ресурс]. URL: http://itar-tass.com/ekonomika

5.[Электронный ресурс]. URL: http://www.banki.ru/banks/memory/

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Stock Exchange and Its Essence in the Russian Market

Economy

Gorovoy Valery,

Kiseleva Ekaterina,

Bokarev Nikita,

Prof. Kuprianova Ludmila,

Finance University Under the Government

Of the Russian Federation, Moscow

Section: «Economics»

Abstract: The research paper introduces the scientific analysis of the main problems of stock exchanges in Russia by using the experience of foreign markets. The problem of the regulation of exchanges by the government, the more government controls operations with fictitious capital for covering the deficit of budget, the more risks the exchange faces, and these risks are definitely connected with crisis situations.

Key words: Russian stock exchange, mar ket economy, stock.

Development of the market economy in Russia has led not only to the transformation of forms and methods of management, changes in the functioning of the commodity and financial markets, modernization of all the spheres of the economy. It has also led to the appearance of new types of economic activities, which were not needed under conditions of planned economy. For example, the stock exchange appeared. A stock exchange is a market, on which a specific good is traded – securities. In fact these securities cost nothing, but their value is defined by assets, which stand after them. What is a security? Security is a special certificate representing partial ownership of a company in the form of a purchased investment. How much the broker owns depends on how many shares of stock he possesses against how many shares were issued [6].

In the prerevolutionary Russia this type of exchange was very developed, but after 1917 it was destroyed by communists, stock markets were liquidated, securities were out of usage. Under conditions of the planned economy movements of financial flows were defined only by governmental economic departments, that is why there was simply no place for the stock exchange. During 90s in Russia the stock market began to rise again. In modern times this segment of the economy is growing much faster than others [12].

Significant economic reforms cannot be finished until the government will allow creating efficiently working financial market, which will involve investments into the economy. Taking into consideration the scale of economic transformations, which should be done in Russia during the process of reorganization, huge financial means are required. However, nor the budget system, nor the internal financial resources can afford it. That is why the role of the financial market in the development of economy is hard to overestimate.

So, we can say, that a securities exchange appears to be a well-organized trading system, where traders can interact with each other through buying and selling securities.

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However, traders don’t trade directly; they should manage their orders through a broker, a member of exchange. Earlier stock markets took place on trading floors, but today exchanges exist through electronic markets [2]. With the duration of time the role of the stock exchange broadened, and it began to mobilize and concentrate temporary free savings, to credit and finance governmental and private sectors through buying and selling their shares on the stock exchange. That is why the theme of the research paper is really urgent nowadays, under conditions of the market economy.

So, the aim of this work is to analyze the main problems of stock exchanges in Russia using the experience of foreign markets. Their achievements and mistakes can help the Russian economists to improve the work of stocks. Another important point is connected with the regulation of exchanges by the government, because the more government controls operations with fictitious capital for covering the deficit of budget, the more risks the exchange faces, and these risks are definitely connected with crisis situations. As we all know, the market economy always develops in a cycle, and there exist market failures. In case of a market failure it may be considered that government regulation should improve the situation. However, government interference may not always help the efficiency of the market.

The major method of observation in this work is comparison of the Russian stock exchanges development with the American ones, the key differences and similarities will be emphasized in the second chapter.

Currently, the market of shares is one of the rapidly developing sectors of the Russian economy. Here are aimed large financial flows, which will lead to an intensification of the activity of criminal structures in this sector.

One of the types of abuse in the stock exchange is market manipulation, the scheme of which is the extraction of profit due to the sale of securities, the demand for which has been artificially formed. Manipulator is a knowledgeable person and he spreads false information about the stocks, creates increased demand for certain securities, and contributes to the increase of prices. Then he carries out his sale at inflated prices. After such manipulation of the price of the market returns to its initial level, and ordinary investors are at a loss.

The risk is one of the most misunderstood concepts related to investment, because it comes in different forms, including the market risk, the opportunity risk, and the risk of inflation. Market risk is the expression for the inherent risk associated with market forces. The opportunity risk includes economic sacrifices, which arises from the fact, to refuse from the benefits of alternative investments.

Risk is a position with an uncertain outcome that has the potential for loss for the holder. Imagine that you can buy a security that will offer a 10 percent return with a probability of 30 percent and a 40 percent return with the same probability. This is not a risky transaction, because there will definitely be no losses even though the resulting outcome isn’t certain. We can take the case when there is an investment that warrants a certain return of 10 percent. It isn’t a risky deal, too [2].

When investing in shares, people put their money at risk to get a profit and not to

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suffer losses. To examine their risks, they should have quality information that is relevant and worthy about the companies they want to invested in. The skills and knowledge of investors have improved greatly in recent years, as well as their quantity. So, too, have changed the quality of data and information. New trading tools have appeared which have made working on the stock exchange easier. Derivatives and other tools are also available for the work of professional investors to handle equity risk effectively [13].

The first and most important rule while you’re getting started as an investor is to evaluate the risks involved and to determine what is the risk that you can handle. Serious risk evaluation and estimation can lower stresses in trading and help you to manage your investments correctly. Every day about two billion shares trade hands on the three major exchanges of the United States. It is really an extremely interesting process to consider and take into account each trade that that reflects the ideas and expectations of two investors (buyer and seller). One of the most important things about exchanges is its ability to digest information. Prices of shares depend on it: when the information about a company is spread, prices can go up or down depending on the content of news. For example, when the Intel Corporation developed a new cheap, that was higher in quality than their competitors’ products, the price of INTC shares increased, and Microsoft’s prices went down. This is the example of risk of owning shares: they can unexpectedly decline in value.

Another necessary thing to do is define the prevailing mood of the market, whether or not the transaction will be successful. Of course, it is not easy to determine it, because there are often things that we cannot expect from the market, but there exist some general parameters. There is no use to short when there is an up market, as well as to use bullish plays in a down market. Also you should consider the concept of the risk to reward ratio (how a certain level of risk relates to a certain amount of reward from investment). Calculating and estimating the reward ratio can provide necessary information about the utility of the transaction. Expected utility is based on unquestionable basics and provides a framework for the analysis of investors' attitudes toward risk. Therefore, expected utility plays an instrumental role in the analysis of portfolio choices [3].

Comparison of the New-York Stock Exchange (NYSE) and the Moscow Interbank Currency Exchange (MICEX)

The NYSE

The New-York Stock Exchange is the most well-known Wall Street institution, which was founded in 1817. It is considered to be the most important stock exchange in the world because of its scale. For about 3000 of domestic and foreign corporations were registered in the NYSE for the year of 2002.Market capitalization of both domestic ($11,1 trillion) and foreign ($4,9 trillion) corporations made a total of $16 trillion, and that was about 41% of global stock market value and exceeded the three greatest stock exchanges (NASDAQ, Tokyo and London) summing them together.

Since 1953 the NYSE has had 1366 voting members, who have a right to trade on the trading floor. They can be divided into three types: two types of floor brokers and dealers (each with a distinct function).

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Commission brokers (workers from brokerage firms, who carry out buy/sell orders, which are made by the firm’s clients);

Independent floor brokers (they operate taking into account only their own decision. However, there exist brokerage companies that do not have their own commission brokers, so independent brokers can work for them);

Specialists/dealers (workers of specialists firms, which are independent entities. Each stock on the NYSE is allocated to a dealer, who makes a market in the assigned security).

The NYSE is an auction market. Floor brokers (both commission and independent brokers), representing buyers and sellers of a stock, gather at the trading post to which the stock is assigned to accomplish buy and sell orders. Bids to buy and sell are made by open outcry, which provides every broker with an opportunity to participate. When the highest bid meets the lowest offer, a trade is executed.

On January 24, 2005 an electronic system called Hybrid Market was launched, which allowed all NYSE stocks to be traded there (trade of very high-priced stocks cannot be executed there). On April 4, 2007 the NYSE Euronext appeared as the result of merging of the NYSE Group and Euronext N.V. [14] Today the Russian stock market is considered to be a developing stock market, but recently it has become larger in volumes.

The first problem (not connected with abuse) is that many participants of the stock exchange do not fully appreciate the possibilities of conclusion of deals in different ways, lack of knowledge about the types of operations on the stock market. In addition, very often it turns out that the participants of the deals have low investment culture. Due to this factor the capitalization of the stock market did not grow at a rapid pace [15].

Another problem of development of the Russian stock exchange is also a legislation, which does not reflect all provisions of the work of investors and participants of the exchange. Today the legislative framework is more developed, but at the beginning of the history of the Russian stock market was not available.

As a result, even now the problem of development of the market is the availability of speculations on stock exchanges. This phenomenon would be gradually eliminated, but even today it often reminds of itself.

Not less significant problem of development of the market is that there are only two monopolists on the market –MICEX and RTS, which have recently merged. As a result of this, it turns out that the other investors do not have the opportunity to approach the investments and shares. This problem has existed since the founding of the Russian stock exchange [16].

In this research paper we have considered some aspects of development of the modern stock market in particular, such as brokerage, valuation of prices, types of stocks, conditions of stock exchange efficiency, the largest stock exchanges etc. Also were discussed the problems and prospects for development of Russia's stock market in the near future.

On the basis of all written before it is possible to make some conclusions. So, undoubtedly, fundamental changes are needed in the situation of the market economy of

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Russia. Russia needs the inflow of serious investors, which could result for the country into the large flows of capital. These investors should be going to stay on the Russian market for a long time. But the investor first of all should have a guarantee of at least relative stability, and he requires greater transparency of the activity of the companies, in which they intend to invest the money, because in the present state of things western investors in fact don’t have adequate information about the state of the companies, about its activity, the level of trust to this company. We see that the information efficiency of the market is at a low level. In addition, western investors have already had negative experience of working on the Russian stock market during the 1998 crisis.

Despite many problems that the Russian stock exchange faces, it should be noted that it is a young, dynamic and perspective market, which is developing on the basis of the positive processes occurring in the Russian economy, and all these processes are connected with the development of market economy in Russia. Such processes are the mass emission of stocks in connection with the privatization of state enterprises, the rapid creation of new commercial entities and holdings, which attract funds on the stock basis, etc. In addition, the stock exchange plays an important role in the system of redistribution of financial resources of the state, and is also necessary for the normal functioning of the market economy. Therefore, the restoration and regulation of the development of the stock exchange is one of the top priority tasks that the government faces, for the solution of which requires the adoption of long-term state program for the development and regulation of the stock market and strict control over its implementation.

The weakening of the role of the exchange, especially in does not change its value in the trade of securities, because is preserved the concentration and centralization of capital on the stock exchange, increases the level of computerization of its operations, improving the forms and methods of collection, delivery and processing of information, is the direct state regulation of stock exchange transactions of the rising trend of internationalization of the stock exchange transactions.

In the future it is necessary to increase the level of organization of the stock exchanges, to create a perfectly functioning system of protection of investors from market abuse, improve the state regulation of the stock exchange, to expand ties with the sto--ck exchanges of the developed countries. Only in solving the problems of the Russian stock market may become what it is all over the civilized world, - the tool for the movement of capital from the financial sector to the industrial.

List of literature:

1.Federal law from 22.04.1996 N 39-FL “On the Stock Market”.

2.Fundamentals of Financial Instruments: An Introduction to Stocks, Bonds, Foreign Exchange, and Derivatives; Parameswaran, Sunil; John Wiley and Sons Inc.; November 8, 2011.

3.Principles of Financial Economics; LeRoy, Stephen F. Werner, Jan; Cambridge University Press, 2010.

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4.Stock Market Efficiency, Insider Dealing and Market Abuse; Barnes, Paul; Ashgate Publishing Group, February 28, 2009.

5.Wall Street Journal Complete Money and Investing Guidebook; Kansas, Dave; Crown Publishing Group; 12/2010.

6.Stock Market Course; Fontanills, George A. Gentile, Tom, Cawood, Richard M.; John Wiley and Sons Inc.; February 28, 2011.

7.Wealth Forever: The Analytics of Stock Markets; Sarkis Joseph Khoury, Poorna Pal; Chungsheng Zhou; John Karayan; World Scientific Publishing Co.; 2009.

8.Stock Market Cycles: Practical Explanation; Bolten, Steven E.; Greenwood Publishing Group, Inc.; 2010.

9. Security Analysis by Benjamin Graham and David L. Dood; McGraw-Hill Companies, Inc. 2009.

10.Arbitrage Guide to Financial Markets; Dubil, Robert; John Wiley and Sons; 2008

11.Wall Street; Roberts, Richard; Bloomberg Press in Association with the Economist; February, 2006.

12.Stock Exchange; N. I. Berzon, E. A. Buyanova, M. A. Kozhevnikov, A. V. Chalenko; Finance and Statistics; 2009.

13.Equity Markets in Action by Robert A. Schwartz.

14.The official cite of the NYSE Euronext - http://www.nyx.com/en/history/timeline

15.“Brokers and Bureaucrats: Building Market Institutions in Russia Frye” by Timothy

M.

16.“Stock Exchange: Russia’s Movement into Informational Society” by N.T. Kleschev, A.A. Fedulov.

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могут быть головной организацией для своих «дочек», которые по отношению к основной головной организации будут «внучатыми» предприятиями.

Корпоративное управление в холдинге происходит путем взаимодействия между топ менеджерами, работниками среднего звена, собственником холдинга, исполнительным органом, государственными органами и множеством других лиц, которые имеют свой определенный интерес, связанный с деятельностью данного холдинга.

Физических или юридических лиц, заинтересованных в финансовых или иных результатах деятельности предприятия (холдинга) будем называть стейкхолдерами. Профессор Бредли Гугинс, директор Центра Корпоративного гражданства при Бостонском колледже определял стейкхолдеров как группы, организации или индивидуумы, на которые влияет компания и от которых она зависит. Одной из основных проблем корпоративного управления, является соблюдение баланса интересов всех стейкхолдеров. [4]

Всех заинтересованных лиц холдинга можно разделить на 3 группы:

-стейкхолдеры, тесно связанные с деятельностью холдинга, работающие в самом холдинге (например, наемные рабочие). Их еще называют «внутренними» стейкхолдерами;

-стейкхолдеры, связанные договорными, но не трудовыми, отношениями с холдингом (например, акционеры). Эту группу стейкхолдеров еще называют «зависимые»;

-«внешние» стейкхолдеры (например, государственные органы). К ним относят заинтересованных лиц, которые не связаны трудовыми отношениями с холдингом, а также иными договорными отношениями, преследующими коммерческую выгоду. «Внешние» Стейкхолдеры могут быть связаны договорными отношениями с холдингом в социальной сфере, сфере охраны окружающей среды.