The economic function of financial markets is to transfer resources and risks between entities in deficit and surplus subjects, in order to rebalance and replenish the productive capital , this means that the best performance of the entire national economy. Let’s see how they work in this sense, the securities markets .

The structure of the securities market is divided on some professionals: actors, the supervisory authorities, managers of trading companies that sell and those that invest. Management companies shall ensure the correctness of the transactions between investors and issuers, which operate through intermediaries that handle the exchange, then get to the real trading with the delivery of securities and the corresponding money . This process between investors and companies that issue securities representing the production process of the securities market .

stock-market

The functions performed by the securities markets depend on the type of market and the nature of the instruments. The creation and placement of securities to be placed on the market, is the financial side that allows issuers to obtain the funds. The securities are then priced and will be determined the expected return, this function is called pricing , and represents the cost that the company will have to bear under the investor’s expected return. The pricing influences the process of accommodation of funds, because it has a direct result on the application of the same. In other words, the more they cost, and there will be less demand, less cost, the higher the cost of the company that issues them.

Marketable securities generate a system of exchange fueled by investors, who buy them or sell them, are therefore increasingly liquid, regardless of their maturity, which means a lower risk and, consequently, a lower rate of return. The capital costs less and therefore the possibility of funding is wider.

The cost of securities markets are those related to transactions, transfers of resources, information and documentation for investors, intermediaries and issuers. They can be reduced if the exchanges are concentrated in a few, or even a single organizational structure, so as to maximize the technical efficiency and operation income.