Mercantile Exchange
The effective functioning of the modern market is in direct dependence on continuously playing the market environment. Its major element is the market infrastructure, which is a system of enterprises and organizations that provide movement of goods, services, money, securities, of the labour force. These institutions belong to the commodity and stock exchange.
Mercantile Exchange - this is a permanent mass market of substitute goods (securities, transport), involving the freedom of commodity production, competition and prices. The emergence of community we have is associated with necessity of some centralization of exchange operations.
Mercantile Exchange in the classical understanding of this:
1) the place regularly at the same time conduct trades on certain goods;
2) the Union of merchants and exchange intermediaries, which together cover the expenses on the organization of trades, set the rules of trade, determine sanctions for their violation; the absolute majority of stock exchanges - it is not profitable organization, a member of the exchange will benefit not from its functioning, and from my participation in the auction.
Exchange trade is organized by the traffickers to facilitate the trafficking process, to develop a more effective mechanism and subsequently, hedging (protection, insurance against unfavorable price changes).
1. exchange activity is concentrated in the places of manufacture and consumption of the goods;
2. is conducted on specific types of goods (the so-called exchange-traded commodities) in large batches;
3. is conducted in the absence of the goods by samples, descriptions;
4. are contracts and agreements for the delivery thereof in the future and the right to conclusion of such agreements in the future;
5. is conducted regularly, take into account the concentration of demand and supply, as well as the buyers and sellers;
6. different publicity trades, all interested persons can obtain information about the V deals and prices;
7. free pricing, price sensitive and very respond to market conditions;
8. is exchange intermediaries, who can speak on behalf of producers and consumers of the goods;
9. absence of the influence of the direct influence of the state on the process of the exchange trade;
10. produces two standards: in terms of quality and prices of goods.
Mercantile Exchange - this is a classic Institute of market economy, which forms the wholesale goods.
Mercantile Exchange has:
- organizational basis;
- the economic basis;
- legal basis.
Mercantile Exchange, from the point of view of the institutional framework, it is well equipped with a market place, provided by brokers and dealers, i.e. professionals of the case.
From the economic point of view, it is organized in a certain place regularly acting according to the established rules the wholesale market, on which there is trading of securities, wholesale trade in models and standards, under the agreements and contracts for the delivery thereof in the future, as well as the selling of a currency and rare-earth metals on prices officially established on the basis of demand and supply.
The exchange is a legal entity, has separate property, can be the claimant and the Respondent in court, arbitration court (arbitration court).
Exchange - organizing system forming part of the market structure. The tasks of the exchange - not supply the economy with raw materials, capital, currency, and the organization, streamlining, unification of markets of raw materials, capital and currency. The functions of the exchange:
1. Organization of the market of raw material with use of the exchange mechanism of:
- first of all Mercantile Exchange provides the demand for raw materials, which are not directly connected with its use. Specifically exchange demand and supply carry out the figures of the exchange - the exchange speculators. Trading on the exchange provides the possibility that at current prices, there will be no shortage , or overstocking;
- on the Mercantile Exchange, not the goods, and the title of ownership to it or the contract on delivery of the goods. Modern commodity exchange is a market of contracts on delivery of the goods at the relatively small size of its actual delivery. The exchange, without the movement of large masses of goods, aligns the demand and supply;
2. Identification of and regulation of stock exchange prices.
Mercantile Exchange participates in the identification and regulation of prices on all kinds of commodity concentration of demand and supply on the stock exchange, the conclusion of a large number of transactions excludes the impact of non-market factors on the price, make it maximally approximated to the real demand and supply. Stock price is in the process of its quotations, which is regarded as the most important function of the exchange. Under the quotation understand the fixing of prices on the stock exchange during each day of its work, the registration of currency or securities, the price of the commodities.
Quotations of the prices is registration of exchange prices by exchange rules with them after the initial publication.
More in detail this function we will look at below.
From here you can see another one of the components of the organization of the market - stabilization of prices:
- fluctuations in prices, caused by the divergence of the real demand and real proposals, slightly elastic , is not repaid immediately, but rather have êóìóëÿòèâíîñòüþ - the ability to turn into a sharp fluctuations in prices. Exchange speculation is a mechanism not âçäóâàíèÿ prices, and their stabilization;
- an important factor stabilization of the prices is the transparency of the transaction, a public setting prices at the beginning and the end of the day (exchange rate), the limitation of daily price fluctuation limits, established by the exchange rules. Related to this is the information activity of exchanges.
3. Development of product standards, establishment of varieties that are acceptable to the consumer and therefore with the relative liquidity, the registration of marks of companies admitted to exchange trade. The last is especially important. It is a kind of limit on the quality of the products produced by the firm. Important aspect of the activities of the exchange is the standardization of model contracts, a kind of establishing traditions of the trade.
4. Still exchange fulfill their commodity distribution function, i.e. the function, because of which they originally appeared - the purchase and sale of real goods.
5. Stabilizing prices for a limited list of raw materials and goods exchange stabilize and costs on manufacture of other, not only the exchange of goods.
6. The stabilization of the monetary circulation and the relief of the loan.
Exchange increases the capacity of the money supply, because it is the realm of maximum liquidity of the goods. Exchange is one of the most important spheres of the application of loan capital, as it provides the reliable provision of loans and reduces the risk to a minimum.
7. The settlement of various disputes and disagreements between the parties and arbitration activities.
8. Formation and functioning of the global market. Modern commodity exchange in this moment connects the functioning of commodity, stock and currency exchanges.
9. Exchange insurance ( hedging ) of the exchange trade participants from unfavourable price fluctuations. For this purpose on the stock exchange are special types of transactions and mechanisms of their execution. Performing the task of insurance of the participants of the exchange trade, the exchange is not so much organizes trade, as it serves. Exchange creates the conditions for that to buyers and sellers of real goods at his own wish could take part simultaneously in the relevant stock exchange as clients or participants. This enhances the credibility of the exchange, attracted to her market speculators, by increasing the number of trade, both directly and through intermediaries.
10. Organization of exchange meetings for the vowels of public bidding, namely:
-organization of exchange trade
-development of rules of exchange trade
-logistics of trading
-qualified the unit exchange
For organization of trades the exchange must first of all have well equipped with “market place” (exchange hall), which could accommodate a fairly large number of buyers and sellers, the leading open outcry. The use of modern electronic means of communication does not require the physical presence of the trading in the hall , and allows you to trade through electronic computer terminals. But in this case, the exchange aims to provide an efficient system of electronic trade.
The organization requires the exchange of the development and observance of the strict rules of trade, i.e. the norms and rules of behavior of the participants of trades in the hall.
The logistics of trading includes equipment of the hall jobs of the participants of trades, computer software, etc.
11. Development exchange contracts, which includes:
-standardization of requirements for quality characteristics of the exchange trades
-standardizing the size of the consignments of goods
-development of uniform requirements to the settlement of stock exchange transactions.
The exchange sets strict requirements to products which are admitted to exchange trading. On the basis of these requirements are developed by the exchange standards, which are considered by the producers and consumers of the commodity exchanges.
12. Guaranteeing the settlement of transactions is achieved through the stock exchange clearing and settlement systems. For this purpose the exchange uses the system of cashless payments through the offset of mutual claims and obligations of the market participants, and also organizes their implementation.
13. Information activities Mercantile Exchange.
The most important function of the exchange are the collection and registration of stock prices to follow as their generalization and publication, providing customers a variety of other interested organizations, to the international market of information about the presence of goods on samples and specimens usually on the basis of the current exchange standards, its publication in Newspapers, magazines, information agencies.
The quotation of the prices is one of the main functions of a commodity exchange. See how this process occurs on a simple example.
Let's say we have a twenty-producers and one hundred buyers of a particular commodity, geographically located at a great distance from each other. There is freedom of the prices and economic ties. Each user independently associated with manufacturers. In the absence of reliable information network commodity prices will vary greatly.
Those same twenty-producers and a hundred of consumers are in a concentrated form of the demand and offer on the stock exchange. Appears one market price, serving as a point of reference for all. The fluctuations of the specific prices are not so significant, appears their basis, which corresponds in principle, the level of socially necessary costs. Who it exceeds, the incurred losses and is eliminated from the game.
The process of quotes is very labor intensive and requires taking into account the different pricing factors. Some basic rules that need to be considered in a mandatory manner.
So, a commodity exchange is a market mechanism that performs a number of stabilizing functions in the economy, namely, provides:
- liquidity and optimal distribution of the most important commodities;
the stabilization of prices and costs, foreign exchange rates, money circulation and credit.
