Chapter 2: Types of Exchanges: Stock Exchange and Stock Exchange Participants

There are the following types of exchanges: stock and commodity exchanges, depending on the subject of transactions concluded on them. They have their own specifics and certain properties. In this chapter we will consider stock exchanges.

The stock exchange is used for trading in shares and bonds of private organizations, government debt obligations, bills of exchange, currency and precious metals. The stock exchange is an intermediary in the securities market. It is constantly involved in trading by carrying out the activity of organizing trading. In the following chapters we will consider in detail the meaning of the concept of “professional participant of the securities market”. And now let’s go further and familiarize ourselves with the peculiarities of the type of stock exchanges we are considering.

Stock exchanges belong to closed exchanges. This means that only participants of these exchanges can trade on them. Russian legislation indicates that only professional members of the securities market can be participants of a stock exchange. There are requirements for stock exchange participants: both by the stock exchange itself and by the legislation. Often the legislation provides general requirements, while the regulatory documents of stock exchanges detail them by setting additional requirements. There are also penalties for violating these rules and the procedure for collecting them. But the amount of fees charged by stock exchange participants for making deals is left to their personal discretion. The stock exchange is obliged to approve the procedure and rules of admission to trading and, in fact, to conduct these trades.
Participants of the stock exchange have the following possibilities:

to perform the functions of a dealer, trading on their own behalf and for their own money or on behalf of a client and at his expense (performing brokerage functions);
participate in the management of the stock exchange’s affairs and in its meetings;
participate in the election process of the Exchange’s management and control bodies, as well as be elected to any of the positions provided for.

In addition, participants of the stock exchange must be provided with information on places and time of trading, list and quotations of securities to be traded on the exchange. The stock exchange must also ensure publicity of the results of trading sessions.
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