The global financial market – the part of the world capital market, the aggregate supply and demand for capital lenders and borrowers of different countries. One of the segments of the global financial market is the stock market or the stock market.
Global financial markets began to develop with the start of the export (migration) of the capital by the end of XIX century.
The functions of the global financial market are the following features:
1. Accumulation of free cash and cash transfers between different branches, countries and regions worldwide.
2. Acceleration and increase production efficiency.
The global financial market is divided into primary and secondary. They are closely related, because the primary market is saturated secondary securities. The primary market is to reallocate capital between lenders and borrowers (investors and recipients). In the secondary market only change contractors, namely:
• a change of debenture holders;
• magnitude of resources does not change the original borrowers.
The secondary market provides a mechanism for the resale of debt, which leads to an increase in the liquidity of the market as a whole and, therefore, increases, and the degree of confidence in the lenders-investors. It provides, therefore, the smooth functioning of the market of loan capital.
The structure of the global financial market
As part of the global financial market is isolated:
• The national financial market;
• The international financial market.
The basis of this division is a sign of national systems of accountability monetary.
Under the domestic financial market is the (main criterion – the subordination of national law):
1. total loan and credit transactions of residents subject to national law, in the national currency of the country of origin (for example, credit obtained in resident banks in local currency);
2. adoption of the residents;
3. Borrowing residents in local or foreign currency in the national system of regulation.
In all three areas we are talking about transactions involving bank-resident.
The global financial market does not exist in the form of a single market, it is only a set of interrelated national markets. Under the international financial markets understand lending and borrowing in currencies outside their country of origin and, therefore, are not subject to direct government regulation on the part of these countries.
Since independence, democratization of society and the economy in the early nineties of the last century witnessed the revival of the domestic financial market in Azerbaijan. A historically short period on the basis of accepted legal acts and regulations, a modern service delivery mechanism for the allocation and reallocation of capital – financial market, the main actors of which are financial – credit institutions (issuers, sellers, buyers, investors, intermediaries, service providers).
The structure of the financial market of Azerbaijan.
The main financial instrument for the accounting segment in our country were the state short-term liabilities (ICT) and the Notes NBA issue and placement of which has recently acquired a random character. And tools such as commercial, treasury and bank bills, corporate bonds and other types of short-term liabilities are not taken proper niche market. Interbank money market provides a redistribution of funds between banks in the form of inter-bank deposits and short-term loans for the implementation of active operations, management balances the requirements of regulatory authorities, in particular the NBA. NBA in this segment represents loans to commercial banks in refinancing. Thus, depending on the situation on the financial market, in order to maintain stability and control of the money supply and to provide liquidity NBA determines the percentage of refinancing. Using various tools provided by monetary policy, the NBA also regulates the volume in circulation of money supply, inflation and the exchange rate of manat to the national currencies of the major developed countries.
Changes in the level of monetization.
In addition to the regulatory function, the NBA is one of the major players in the interbank money market is one of the areas of inter-bank deposits and loans – is the realization of active operations by banks lending to businesses. Therefore, the number of participants in this segment are economic entities – legal and natural persons with their demand for credit, as well as people – bank depositors funds, banks extend loans.
On the interbank segment of the financial market as a broker for interbank loans involved Baku Interbank Currency Exchange (VVVV). Foreign exchange market provides settlements on foreign trade, services, investment, international payments through the exchange of one currency for another in the form of a purchase or sale of foreign currency by the payer or recipient. The main participants in this segment of the money market, along with other by banks and the Baku Interbank Currency Exchange (VVVV), which performs mediation and which formed the currency exchange rate as the basis for the official rate NBA. This market is divided into two segments: the exchange and OTC.
Capital market is presented in the form of direct and portfolio investment. Direct investment involves the use of tools such as the medium – and long-term loans. In this segment of active participants by banks, credit, leasing, investment organizations. In addition to banks in the process of direct investment in the fixed assets of the company involved and the organization of its own funds, the population of the country at the expense of personal funds, state budget, extra-budgetary funds. In this segment of the capital market and foreign investment were present.
In contrast to the above short-term securities are instruments of the accounting segment of the money market, capital market securities are long-term. Unfortunately, the stock market and long-term bonds have not yet gained the necessary speed, stock trading is sluggish, and the secondary securities market is virtually nonexistent. Activation of this market will strengthen the work of the National Depository Center, the emergence of institutions brokerage, dealing, development repo and trust operations.
As can be seen from the above financial market of Azerbaijan passed the stage of formation and is in the process of development. Therefore, the most important task is to develop a strategy for further development and the creation of a universal financial market in the country (with a wide range of instruments and a set of services, with the involvement of new participants – issuers (municipalities, corporations) and investors), service-oriented international scale, able to integrate itself into the international financial market with their instruments, including securities, which will ultimately contribute to the development of entrepreneurship and the Azerbaijani economy in general.