Characteristic Features and Types of the Modern Market
Characteristic features of the modern market. The first sign of the modern market is that it is a buyer market. What does it mean? This is a market situation in which the supply of goods exceeds the demand for them at a fixed price. It determines the priority of buyers with respect to sellers. That is, there is a “dictation of consumers” in contrast to the “dictation of sellers”, characteristic of our modern economy.
Under such a situation, an entrepreneur can only increase his revenues when he places high quality products at affordable prices on the market. Therefore, the market of buyers acts as an incentive for the continuous reproduction of business rather than speculative relations. That is, it forces entrepreneurs to look for sources of income primarily in the field of production, and not in the sphere of sales.
The second mandatory feature of the modern market is its competitive character. This means that in the enterprise system, each entity acts as a competitor to all other entities. The possibility of competition between the participants in business relations in the market is laid down in their economic independence (sovereignty), the basis of which is the right to dispose of objects of market relations. This right in the past was based on the private ownership of an entrepreneur. Under modern conditions it can be private, both collective and state property. The inevitability of competition between entrepreneurs in the modern market is generated by the priority of buyers over sellers. How to understand this?
In an attempt to satisfy the needs of consumers, entrepreneurs can realize their own economic sovereignty, only by entering into mutual competition for the attention of consumers. A completely different situation on the market of sellers, characteristic of a scarce economy. Here the buyers compete for the attention of the sellers. Competition also covers the relationship between entrepreneurs and consumers. It is a competition for prices, quality of goods. The victory of one or the other depends on the level of development of the economy as a whole, as well as on the degree of development of market relations.
The third sign of the modern market is the stabilization of relations between market actors on the basis of integration. The modern market is an arena of rivalry of entrepreneurs and other sovereign economic agents (for example, buyers), each of which must be guaranteed its sovereignty and the preservation of competitive potency. And this is possible only in the face of countering the monopolization of the economy and the broad integration of competitive players in market relations.
Since various entities come into market relations, and various goods and services come into the sphere of exchange, a rather complex market structure, which includes the most diverse types of markets, is formed in the country. They can be considered from the point of various aspects.
So, from the point of view of the objects of exchange, markets are: the market of means of production, the market of consumer goods, the market of services, the market of loan capital, the market of securities, the currency market, information market, market of scientific and technical developments, labor market, market housing, etc. In the middle of this structure, depending on the degree of organization, we can talk about organized – stock exchange or unorganized – OTC markets. Thus, a market economy consists of a large number of individual markets. Each product or service has its own market.
Looking from the point of view of the territory, the market can be internal and external. The domestic market, in turn, can be characterized as a national, regional and local (local). National – is the entire domestic market of the country, limited by its borders. Regional – the market of a separate territorial unit (republic, region, region, district). Local – a local market, which includes a certain set of settlements. Regional and local markets, unlike national ones, do not have clearly defined boundaries.
Every type of market has its own peculiarities. All of them are closely linked and organically interact: if there is a violation in one of them, it causes interruptions in the work of others and the system as a whole.
All types of markets can be reduced to four economic entities: market of goods and services; money market; Securities Market; labor market. Behind them there are actually the above-mentioned markets.
In the context of deepening and expanding global economic relations, commodity markets lose national and territorial boundaries, turning into world commodity markets, which are traders of all countries. At the same time, national markets for individual goods within the state borders continue to exist and, consequently, separate nationalities.
The market is the organizational form of the existence of commodity production. The history of the latter is about 6,000 years old. Approximately the same number exists in the market. If we consider the evolution of the market from the point of view of the subjects of market relations, then we will see that it was originally direct producers and consumers of commodity products. Then, as it develops and separates into independent branches of trade and money circulation, commercial and financial intermediaries are becoming active participants in market relations: commercial agents, salesmen, consignors, brokers, dealers, etc. These entities, acting as individuals or legal entities, play an increasingly important role in a market economy, and it is no coincidence.
The market is a complex mechanism for identifying and reconciling economic interests. That is what trade and financial intermediaries are doing. They study the state of affairs with the supply and demand of certain goods, the dynamics of prices, establish business contacts, forecast the market situation, etc. Their activity is considered to be extremely necessary and highly valued by society. There is even a perception that in a market mechanism, intermediary links act as a management system. On the contrary, under the conditions of a command economy, mediation is seen as secondary, and even totally undesirable because the state apparatus is a comprehensive regulator of public life. The mediator, which provides the independent functioning of farms, objectively opposes the state apparatus, threatening its very existence.
Stock market or securities market is a set of stock market participants and legal relations between them regarding the placement, circulation and accounting of securities and derivatives (derivatives). The stock market is divided into primary and secondary.
In the primary market, sales are made, the initial placement of new issues (issues) of securities in order to obtain the issuer of financial resources. Issuers can be the state represented by the authorities authorized by it various enterprises, organizations. Customers in this market are investors – individuals and legal entities, residents and non-residents who have acquired ownership of securities in order to receive income.
After the securities of new issues are placed on the primary market, they become the object of resale. Resale of securities is carried out on the so-called secondary market.
Both in the primary and secondary markets there are many ways to sell and buy securities. The main one is securities trading on stock exchanges.
The stock exchange is an organized, constantly functioning market where securities trading and other financial instruments are traded.
From an organizational and legal point of view, the stock exchange is a professional participant in the stock market (organizer of trade) to create organizational, technological, informational, legal and other conditions for the collection and dissemination of information on demand and supply, regular trading of financial instruments in accordance with established rules, centralized conclusion and execution of agreements on financial instruments, including clearing and settlement, and resolution of disputes between members of the stock exchange.
In terms of legal status in world practice, there are three types of stock exchanges: public-law, private and mixed.
As a public-law organization, the stock exchange is under constant state control. The state participates in the drafting of the Rules of Exchange Trading and monitors their implementation, ensures the rule of law at the exchange during the bidding, assigns stock brokers and eliminates them from work. The public-law type of stock exchange is common in countries such as Germany and France, India and others.
Stock exchanges as private companies are formed in the form of joint-stock companies. Such exchanges are completely independent in the organization of stock trading, all transactions on the exchange are carried out in accordance with the law in force in the country, the violation of which provides for legal liability. The state does not assume any guarantees to ensure the stability of stock trading and reduce the risk of trade transactions. This type of stock is typical for England, the United States.
If stock exchanges are created as joint stock companies, but at least not less than 50% of their capital belongs to the state, they are classified as mixed. At the head of such exchanges there are exchange offices that are selected, but the Exchange Commissioner, who is appointed by the state and oversees the stock exchange activities and officially registers stock exchange rates. Such exchanges operate in Austria, Switzerland and Sweden.
The profit of the stock exchange is directed towards its development and is not subject to distribution between its founders (participants). The stock exchange has the right to conduct trading activities in the stock market only after obtaining a license from the State Commission for Securities and Stock Market.
Members of the stock exchange can be exclusively professional participants – licensed securities dealers. Trading on the stock exchange is carried out according to the rules of the stock exchange, which are approved by the exchange board and registered by the State Commission on Securities and Stock Market.
The stock exchange is now one of the regulators of the financial market. The main role of the stock exchange is to maintain flows of financial and loan capital: accumulation and concentration of capital, on the one hand, and lending and financing of the state and various economic structures – on the other.
The role of the stock exchange in the economy of the country is determined primarily by the degree of denationalization of ownership, or rather, shareholding in the production of gross national product. In addition, the role of the exchange depends on the level of development of the securities market in general.