chapter 2 Securities market

The history of formation and development of securities market • The history of formation and development of securities market in the world • Process of formation and development of

Securities market

Chapter 2

Chapter 2: Securities market

2.1 The history of formation and

development of securities market

2.2 Functions and roles of securities

market

2.3 Classification of securities market

2.4 Operation principles of securities

market

2.5 Participants

2.1 The history of formation and

development of securities

market

• The history of formation and

development of securities market in

the world

• Process of formation and

development of securities market in

Vietnam

2.2 Functions and roles of

securities market

• Mobilizing/raising capital for economics

• Assessment the business value

• Providing investment environment

• Guaranteeing the liquidity

• Giving the government a good chance to carry out the macroeconomic policy

• Based on the turnover process of

Primary market

– The primary market refers to the market

where new issues (stocks and bonds not sold before) are sold

– Companies, governments and other groups obtain financing through debt or equity based securities

– Primary markets are facilitated by

underwriting groups, which consist of

investment banks that will set a beginning

price range for a given security and then

oversee its sale directly to investors

Secondary market

• A secondary market is the market in which assets are traded after they have been

sold through the primary market In this

market, investors trade directly with each other through an exchange

Centralized market (stock

exchange)

• A financial market structure that consists

of having all orders routed to one central exchange with no other competing market The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking

to buy or sell the specific asset

Over-the-counter market

• A decentralized market of securities not

listed on an exchange where market

participants trade over the telephone,

facsimile or electronic network instead of a physical trading floor There is no central exchange or meeting place for this market

Equity market

• The market in which shares are issued and traded, either through exchanges or over-the-counter markets

Bond market

• The environment in which the issuance and trading of debt securities occurs

The difference between the bond

market and the stock market

• The bond market is where investors go to

trade (buy and sell) debt securities,

prominently bonds

• The stock market is a place where

investors go to trade (buy and sell) equity

securities like common stocks and

derivatives (options, futures etc)

Derivatives market

• A security whose price is dependent upon or

derived from one or more underlying assets The derivative itself is merely a contract between two

or more parties Its value is determined by

fluctuations in the underlying asset.

• The most common underlying assets

include stocks, bonds, commodities, currencies, interest rates and market indexes.

 Derivatives market is the environment in which the trading of derivatives occurs.

2.5 Participants

• Issuing organizations

• Investors (individual and organization)

• Brokers and stock dealers

• Market support organizations

Participants directly organize the

operation

• Stock exchange

• The Securities Depository Centre

• Nominated bank for payment

• Securities companies

• Commercial banks

• The Associations of financial Investors

The Stock Exchange

• Definition of stock exchange

• Operational organization model of stock exchange

Definition of Stock exchange

• The Stock Exchange is the Organization, which organizes the securities trading

market for securities listed in it

Operational organization model of

stock exchange

• Club and association model

• Joint stock company

• Joint stock with government participation

• 100% state-own enterprise

Organization model of stock

exchange in Vietnam

• Organizational model

• Organizational structure (institutional framework)

Institutional framework of stock

exchange

BOARD OF MANAGERS

Transactions

management

Listing management

Clearance section

Member management Other

competencies

Finance accounting IT

-Personnel department

BOARD OF DIRECTORS

OTC Market

• The Over – The – Counter Market is not a centralized exchange, but a network of

security dealers who use an electronic

system to quote price at which they will

buy and sell shares

TASK FOR CHAPTER 2

Write about:

• OTC Market in Vietnam

• OTC market in the other countries

Tasks to prepare for the chapter 3

• Read the Securities Law of Vietnam

• Go to the HOSE’s website

to find the regulations (in English)

Video to learn Financial English

at home

• Financial English Vocabulary Lesson

for ESL (YOU.TUBE – Video VOCAB.)