The primary securities market always remains rather uncertain and capricious. Shares and other securities may not be distributed as actively as we would like. There may be doubts about the efficiency of the issuing enterprises, the prices of their shares will decrease in these cases. Therefore, the risk of guarantors can become very high. The stability of the market will largely depend on brokers and dealers, their ability to “fix” the price, i.e. to give it stability, to prevent its sharp fluctuations. The primary securities market, for all its organization, always retains the potential threat of loss of balance and stability.
The secondary securities marketis the sphere of circulation of securities, where they fall after they are sold by the first owner who bought them from the issuer (directly or through an intermediary). The primary and secondary securities markets are closely related to each other. Uninterrupted, active work of the secondary market ensures the liquidity of securities and thus contributes to the successful placement of new issues of securities in the primary market.
5. Depending on the level of trade organization, it is customary to divide the securities market into organized and unorganized sectors. An organized securities market presupposes the existence of a trading system (trading organizer), common standards and rules, systems for access to trading and trading participants, and a high level of information transparency. The organized securities market, in turn, is divided into exchange and over-the-counter (Fig. 1).
Exchange marketmeans that trading is carried out on stock exchanges by members of the exchange. The stock exchange is an organized, regularly functioning market for the purchase and sale of securities, which performs two main functions:
- determining the price of financial assets (securities) in accordance with supply and demand;
- transfer of existing financial assets between buyers and sellers.
In most countries, the bulk (about 85%) of securities circulate on the unorganized market, and a relatively small part (15%) on the organized market. However, it is the organized market, where the highest quality, and therefore the most important securities are concentrated, that determines the situation and the process of development of the stock market.
