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federal state budgetary educational institution higher professional education
Chelyabinsk State University
Institute of Industrial Economics, Business and Administration
Department of economics of industries and market
abstract
subject: "International currency relations"
on the topic: "Foreign exchange market»
Chelyabinsk
Introduction
The successful development of currency relations is possible if there is a special market where you can freely sell and buy currency. Without such an opportunity, economic counterparties simply would not be able to realize their currency relations - they would not have foreign currency to fulfill their external obligations, they could not turn the received foreign exchange earnings into national money to fulfill their internal obligations. Such a market is usually called a currency market.
Nevertheless, in the foreign exchange market, people buy and sell foreign currency not only for making payments, but also for other purposes: for speculative operations, currency risk hedging operations, etc. Moreover, these operations are acquiring an ever wider scope, which takes the foreign exchange market beyond the boundaries of a simple appendage to international settlement and payment relations and gives it the status of a relatively independent economic structure. According to its economic content, the foreign exchange market is a sector money market, on which demand and supply for such a specific product as currency are balanced. According to its purpose and organizational form, the foreign exchange market is a set of special institutions and mechanisms that, in interaction, provide the opportunity to freely sell and buy national and foreign currencies based on supply and demand. The foreign exchange market has all the attributes of an ordinary market: objects and subjects, supply and demand, price, special infrastructure and communications, etc.
1. Concept, tools foreign exchange market
The economy of any state cannot exist without a developed financial market. Integral part financial market is the foreign exchange market. The foreign exchange market is a sphere of economic relations that manifests itself in the implementation of an operation for the sale and purchase of foreign currency and securities in foreign currency, as well as operations for the investment of foreign exchange capital. Any market economic entity- acts only as a seller or buyer. The foreign exchange market is a kind of tool for coordinating the interests of the seller and buyer of currency values. Any action of the seller or buyer in the market is associated with commercial risk. Commercial risk is the danger of possible losses from the implementation of a particular financial and commercial activity. The foreign exchange market also contains the concept of currency risk - the receipt by an economic entity of additional expenses or income, depending on changes in exchange rates. For any currency, the foreign exchange market consists of all international financial centers located in London, New York, Paris, Zurich, Frankfurt, Singapore, Hong Kong, Tokyo, where this currency is sold and bought for another currency. These international financial centers are interconnected by all means of communication and are in constant contact with each other, thus forming a single international currency market and providing round-the-clock foreign exchange trading.
Modern currency markets have the following features:
1. They belong to the group of efficient markets, which are characterized by a large volume of transactions (up to 2 trillion dollars a day), a huge number of participants, fairly free access to the market, and availability of price information;
2. Internationalization is increasing;
3. Operations are carried out continuously throughout the day, since the main centers of currency trading are separated by time zones;
4. The purchase of currency is carried out mainly for speculative and arbitrage transactions;
5. There is instability in exchange rates, which has led to the fact that the exchange rate has become a kind of exchange commodity.
According to the entities operating with currency, the currency markets are divided into:
1. In the interbank foreign exchange market by maturity foreign exchange transactions there are three main segments: spot market - a market with immediate delivery of currency. It accounts for up to 65% of the total currency turnover; forward market - forward market, where up to 10% of foreign exchange transactions are carried out; swap market - a market that combines currency purchase and sale operations on spot and forward terms. It implements up to 25% of all foreign exchange transactions.
2. In the exchange segment of the currency market, transactions with currency can be made through the currency exchange, or by trading derivatives (derivative stock instruments) in currency departments commodity and stock exchanges.
3. On the client segment of the foreign exchange market individuals and corporate clients conduct foreign exchange transactions with the help of commercial banks.
Depending on the volume, nature of foreign exchange transactions and the number of currencies used, foreign exchange markets are divided into:
1. global currency markets - concentrated in the world's financial centers - in London, New York, Tokyo, Frankfurt am Main, Singapore, Paris. The leading world center of currency trading is London, it accounts for 1/3 of all currency transactions in the world.
2. regional currency markets - they carry out transactions with a certain range of convertible currencies (for example, the Kuwaiti dinar, etc.) 3. the domestic currency market is the market of one state.
It is understood as the whole set of operations carried out by banks located in the territory of a given country, for foreign exchange services for their customers (which may include companies, individuals and banks that do not specialize in international foreign exchange operations), as well as their own foreign exchange operations.
In countries with limited currency legislation the official foreign exchange market is usually complemented by a "black" (illegal) and "gray" (where banks transact with non-convertible currencies) market. In relation to foreign exchange restrictions, free and non-free foreign exchange markets are distinguished, and according to the types of application of exchange rates - with one regime and with two regimes of the exchange rate. In general, most foreign exchange transactions in industrial developed countries(about 80% of all foreign exchange transactions) is carried out in the interbank segment of the foreign exchange market and, mainly, in the current (spot) market. It is in the course of interbank transactions that the exchange rate is directly formed.
2. Functions of the foreign exchange market
The foreign exchange market performs the following functions:
1. transfers purchasing power from one country to another through currency exchange;
2. provides a clearing mechanism for international payments, without making significant changes to the net positions of commercial banks in the implementation of large transactions with the purchase / sale of currencies;
3. Provides a source of short-term credit to importers and borrowers by enabling banks to buy term drafts drawn in foreign currency and held until maturity with an obligation to pay a check drawn for a specific term;
4. provides methods for hedging open currency positions;
5. provides ample opportunities for speculative transactions;
6. provides opportunities for arbitrage transactions.
The transfer of funds or purchasing power from one currency to another is an essential function of foreign exchange markets. The rest of currency trading is used in transactions made by traders and speculators who buy and sell currencies in anticipation of quick profits from predicted changes in the relative value of the currency.
3. Structural characteristics of the foreign exchange market
3.1 Structuralcharacteristics of the foreign exchange market
By types and forms of functioning.
By area of distribution, i.e. in terms of breadth of coverage, it is possible to distinguish international (international financial centers) and domestic currency markets. So international (world) currency markets are concentrated in the main financial centers Western Europe, USA, Middle East, East Asia. Most major centers located in London, New York, Frankfurt am Main, Paris, Zurich, Tokyo, Singapore, etc. According to some estimates, the London market accounts for one third to one half of the annual turnover. It is gradually catching up with the New York market. In turn, both international and domestic markets consist of a number of regional markets, which are formed by financial centers in certain regions of the world or a given country. The international currency market covers the currency markets of all countries of the world. The international currency market should also be understood as a chain of global regional currency markets closely interconnected by a system of cable and satellite communications.
There is an overflow of funds between them, depending on the current information and forecasts of the leading market participants regarding the possible position of individual currencies. In relation to currency restrictions, one can single out free and non-free currency markets (this applies to regional and national currency markets), depending on the absence or presence of currency restrictions on it. Regulation of foreign exchange transactions in foreign countries usually carried out at two levels. it state regulation, carried out within the framework of the monetary policy of the state, and restrictions imposed directly by banks to insure their activities against possible losses. The monetary policy of any state is, first of all, an element economic strategy government in power.
In the most general terms, the monetary policy of developed countries is a purposeful use by the authorities of certain mechanisms to achieve goals. economic policy- stimulating the rates of economic growth, employment of the population and combating inflationary tendencies. In general, monetary policy is designed to regulate the external competitiveness of the state, to protect the economy from the negative impact of currency instability and any external factors. Currency restrictions are a system of state measures (administrative, legislative, economic, organizational) to establish the procedure for conducting transactions with the subject of operation (foreign currency, securities expressed in it, currency values) in individual countries, imputed by national legislation. Currency restrictions include measures for the targeted regulation of payments and transfers of national and foreign currency abroad, as well as establishing the procedure for settlements in foreign currency on the domestic market. A foreign exchange market with foreign exchange restrictions is called a non-free market, and in the absence of them, a free foreign exchange market. According to the types of exchange rates used, the foreign exchange market can be with one regime and with a dual regime.
A single regime market is a foreign exchange market with free exchange rates, i.e. with floating exchange rates, the quotation of which is established at exchange auctions. A dual currency market is a market where both fixed and floating currencies are used simultaneously. The introduction of a dual currency market is used by the state as a measure to regulate the movement of capital between the national and international loan capital markets.
This measure is designed to limit and control the impact international market loan capital on the economy of the state. According to the degree of organization, the foreign exchange market is exchange and over-the-counter. The exchange currency market is an organized market, which is represented by a currency exchange. Currency exchange - an enterprise that organizes trading in currency and securities in foreign currency. The exchange is not a commercial enterprise. Its main function is not to obtain high profits, but to mobilize temporarily free Money through the sale of currency and securities in currency and in setting the exchange rate, i.e. her market value. The exchange currency market has a number of advantages: it is the cheapest source of currency and foreign exchange funds; bids put up for exchange auctions have absolute liquidity(liquidity of currency and securities in foreign currency means their ability to quickly and without loss in price turn into rubles). The over-the-counter currency market is organized by dealers, who may or may not be members of the currency exchange, and conduct it by telephone, telefax, computer networks.
This is the so-called currency dealing (ForEx DEALING). After 1973, the prices of currencies were no longer determined by the gold reserves of countries (Brenton Wood Agreement) and today the over-the-counter currency trading market (total market turnover per day) is 1.2 trillion. US dollars, outpacing, for example, the US government debt market by about four times. It should be noted that the huge financial potential of this market determines the excess profits and excess losses that its participants bear.
The most famous is Soros's breakthrough, when on September 23-25, 1982, the profit received by his fund was estimated at 1 billion US dollars. Forex Market can be divided into four "echelons" (segments). - large (margin =10 mm. $); - medium (margin = 0.5 mln. $); - small (margin = 0.005 mln. $); - "starting" (margin = 1 $). Main game currencies: USD - US dollar; DEM - German mark; GBP - English pound; JPY - Japanese yen; SWF - Swiss franc. Of course, being opposite sides of the same coin, the exchange and over-the-counter markets (although they contradict each other to a certain extent) at the same time complement each other. This is due to the fact that, while performing the general function of trading in currency and circulation of securities in foreign currency, they use various methods and forms of selling currency and securities in foreign currency.
The advantages of the over-the-counter foreign exchange market are: rather low cost of expenses for currency exchange operations. Bank dealers often use face-to-face foreign exchange auctions on the stock exchange to reduce their own costs for foreign exchange conversion by concluding agreements on the sale and purchase of currency at the exchange rate before the start of trading on the stock exchange.
On the exchange, commissions are charged from bidders, the amount of which is directly dependent on the amount of currency and ruble resources sold. In addition, the law establishes a tax on exchange transactions. In the over-the-counter market for authorized bank after the counterparty for the transaction has been found, the currency conversion operation is carried out practically free of charge; - higher speed of settlements than when trading on the currency exchange. This is primarily due to the fact that the over-the-counter foreign exchange market allows you to conduct transactions throughout the entire business day, and not at a strictly defined time of the exchange session. Further, when classifying foreign exchange markets, it is necessary to single out the markets for eurocurrencies, eurobonds, eurodeposits, eurocredits, as well as "black" and "gray" markets.
Let's dwell on this briefly. The eurocurrency market is the international currency market of Western European countries, where transactions are carried out in the currencies of these countries. The functioning of the eurocurrency market is associated with the use of currencies in non-cash deposit and loan transactions outside the countries issuing these currencies. The Eurobond market expresses financial relations on debt obligations with long-term loans in Eurocurrencies, issued in the form of bonds of borrowers. The bond contains data on the amount of debt, the conditions and terms of its repayment, the procedure for obtaining interest in accordance with coupons (a coupon is a part of a bond certificate, which, when separated from it, gives the owner the right to receive interest). The Eurodeposit market expresses stable financial relations for the formation of deposits in foreign currency in commercial banks foreign states at the expense of funds circulating on the Eurocurrency market. The eurocredit market expresses stable credit relations and financial relations for the provision of international loans in eurocurrency by commercial banks of foreign countries.
Futures trading in last years is the most important segment of the development of financial markets. rapid development derivatives markets is facilitated by the existing volatility and rapid volatility of commodity prices and financial instruments. When characterizing derivatives markets, we can single out: - the market for forward contracts; - futures market; - options market. Forward transactions, or futures transactions for cash, in accordance with which the buyer and seller agree to the delivery of a commodity or currency at a certain date in the future, are an alternative to futures and options practiced on the exchange, as well as one of the first forms of futures contract that arose as reaction to a significant price change. Futures market.
One of the most successful and at the same time the most controversial innovations in the global financial markets in recent decades has been the beginning of trading in financial futures, i.e. such futures contracts, which are based on financial instruments with a fixed interest rate and exchange rates. A futures contract is a legally valid agreement between two parties to deliver or receive a commodity of a certain quantity and quality at a pre-agreed price at a certain moment or a certain number of points in the future. Financial futures is an agreement to buy or sell a financial instrument at a pre-agreed price within a certain month in the future (on a certain day of the month).
The futures contract market serves two main purposes:
1. It allows investors to hedge against adverse price changes in the spot market in the future (hedger operations).
2. It allows speculators to open large positions with little collateral. Options market. Options are one of the types of futures transactions.
An option is a bilateral agreement to transfer rights (for the buyer) and an obligation (for the seller) to buy or sell a certain financial asset at a fixed rate on a pre-agreed date or within an agreed period of time. The currency options market was widely developed in the mid-1970s. XX century, after the introduction in most countries instead of fixed exchange rates floating (since March 1973). A currency option is a contract that gives the right (but not the obligation) to one of the participants in the transaction to buy or sell a certain amount of foreign currency at a fixed price (the strike price of the option) for a certain period of time, while the other participant undertakes, if necessary, to ensure the exercise of this right by being ready to sell or buy foreign currency at a certain negotiated price.
3.2 Market Participants
To give a more complete structural description of the foreign exchange market, it is necessary to list its participants and consider some of the features of their activities. Let's dwell on this issue in more detail. As a rule, there are three main groups of participants, each of which is not homogeneous in its composition. The foreign exchange market is predominantly an interbank market. Therefore, banks and other financial institutions, which constitute the first group of its participants, primarily act as its main actors. They can carry out operations both for their own purposes and in the interests of their clientele.
At the same time, participants can work in the market, entering into direct contact with each other, or act through intermediaries. This category is primarily commercial banks, a special place in it is occupied by the central banks of countries. In addition, various financial institutions play a significant role, such as financial affiliates of large industrial and financial groups that have entered the world stage. The scale of their activities in the foreign exchange market is constantly increasing, especially rapidly they have grown in the last decade. For example, large companies operating in any area of production (electronics, aerospace engineering, chemical production, energy, automotive, energy production and processing, etc.) have their own banks or financial divisions operating in the foreign exchange market. To conduct foreign exchange transactions, large commercial banks have deposits in foreign financial institutions that are their correspondents.
At the same time, not all big banks Western European countries act as permanent participants in the foreign exchange market. For example, in France they are only a few banks: Credit Lyonne, Paribas, Societe Generale, Bank Nacional de Paris, Endosuez and some others. As already noted, the first group of participants in the foreign exchange market includes central banks. They occupy a special position in this group. First of all, by their status they are not commercial institutions and for this reason alone they differ significantly from commercial banks and other financial institutions. Central banks also have a dealing department in their structure. However, foreign exchange transactions occupy a subordinate place in the activities of central banks, since they serve for them mainly only as a means of carrying out their main functions and, as a rule, do not aim at the direct extraction of income. In addition, central banks have different types of counterparties and perform different functions. On the one hand, they are guided by the orders of their government (in those countries where central bank does not enjoy full independence) or participate in the implementation of an economic policy agreed with it (in states where the central bank is more independent).
They also coordinate their actions in the foreign exchange market with the policies of the central banks of other countries (in particular, when conducting foreign exchange interventions) and are guided by the provisions normative documents international financial institutions. On the other hand, the function of central banks is to monitor the state of the foreign exchange market and regulate it. First of all, it concerns the course national currency, the adjustment of which in the desired direction is carried out, in particular, through interventions in the foreign exchange market, as well as with the help of the foreign exchange reserves of the central bank. In addition, it may affect the operations of commercial banks of the country and other financial institutions, as well as brokers who are required to unconditionally provide the central bank with relevant information. The second group of foreign exchange market participants are independent brokers and brokerage firms.
In addition to conducting their own foreign exchange transactions, they carry out information and intermediary functions, which are closely interconnected. Their informational function is that they tell other market participants the exchange rates at which the latter are ready to make transactions. The intermediary function is that brokers concentrate in their hands orders to sell and buy currencies and provide useful information to bank dealers, which greatly facilitates the activities of the latter. Both individual brokers and brokerage firms have a wide network of correspondents and receive income (brokerage commission) on each transaction, both from the seller and the buyer of the currency.
The authority of a particular broker in the foreign exchange market, as a rule, depends on the scale of its activities, the number and solidity of its clientele, and the names of correspondents are the subject of trade secrets. This practice is of particular interest to some financial institutions that do not want to disclose their position in any currency until a certain point. In general, the activities of brokers contribute to the revival of business activity and increase the efficiency of the foreign exchange market. At the same time, it should be noted that the role of brokers in this market is gradually decreasing with a simultaneous increase in the share of transactions implemented through an automated dealer network. Currently, only about 1/3 of the total number of foreign exchange transactions is carried out by brokers. In the field of foreign exchange transactions, brokerage firms, like banks, have their own structure, consisting of departments, each of which deals with one or more currencies.
Accordingly, within the framework of the department, each broker specializes either in "spot" type transactions, or deals with transactions for a certain period, focusing on a specific group of correspondents. The largest and most famous of the brokerage firms in Western Europe are concentrated in London. These are firms of international scale, having representatives or branches not only at the London, but also at other currency exchanges. The third group of participants in the foreign exchange market includes all those who do not personally carry out transactions with currencies, i.e. those who do not speak here directly, but use the services of banks. First of all, they are legal entities(enterprises of industry, trade and other sectors of the economy, some financial non-banking institutions), as well as individuals. Among the financial non-banking institutions that do not directly carry out operations on the foreign exchange market, there are, in particular, pension funds, insurance companies and hedge funds (or hedge companies). Being able to accumulate significant financial resources, they can also operate in international markets and are important participants in the foreign exchange market, acting through intermediaries.
3.3 Segments of the foreign exchange market
currency market broker futures
In the foreign exchange market, operations of various contents are carried out, which are united by the corresponding market segments. The main segments of the interbank foreign exchange market are the cash market (the market for transactions at the current rate, or telegraphic transfer operations, also referred to in Western literature as the "spot" market) and the futures market (or the market for transactions for a period). In the cash market ("slot" market), the purchase and sale of currencies takes place on the terms of settlement within two business days after the date of the transaction and at the rate at the time of its conclusion. The cash market, being a part of the foreign exchange market, also functions continuously. This means that its participants can buy or sell currency during the entire time of its operation. The exchange rate of any currency is set on the spot market in relation to the US dollar, while there may not be a direct correlation between other currencies at a certain moment. Despite the continuous nature of foreign exchange transactions and the constant determination of exchange rates, in some financial centers there is a so-called "fixing" procedure, the duration of which is different countries different. "Fixing is a process official definition exchange rates of various currencies, i.e. their quotation during periodic meetings of the main market participants, which are held in each financial center.
For example, in Paris indoors stock exchange since 1977, the fixing procedure has been carried out daily on weekdays for approximately 30 minutes (beginning at 13.30 in winter, and at 14.00 in summer). At the same time, the representative of the French Association of Exchanges announces the rates of the main currencies (the selling and buying rates for each of the currencies) against the French franc, which are then published in the official publication of France.
The difference between the seller's rate and the buyer's rate is called the "spread, or "margin" and represents the income of the bank using the mentioned quotes when conducting foreign exchange transactions. Such an official currency quote allows the clientele of commercial banks to better orient themselves regarding the situation in the foreign exchange market and more accurately formulate their orders to banks The exchange rate of any currency (usually in relation to the US dollar) is expressed as a figure that includes four decimal places, i.e. ten thousandths of 1. In this regard, in the professional terminology of dealers, the concept of "pip", i.e. "point ", denoting 1/10000 of the exchange rate.
For example, the exchange rate of the French franc against the US dollar can be expressed as 5.5950-5.5958, where the first corresponds to the purchase rate, and the second to the sale. In this case, the franc rate can also be represented as the following expression: 5.5950/08, where 08 is the number of "pips", which is the difference between the selling and buying rates, or "spread" ("margin"). The official quotation of currencies (fixing) in one form or another is carried out on most exchanges in the cities of Western Europe: in Amsterdam, Brussels, Madrid, Milan, Paris, Frankfurt am Main. However, the largest of them (London and Zurich) do not have such a quote.
Currently, the cash market ("spot" market) is still the largest segment of the foreign exchange market. Despite the fact that in recent years the volume of trading here has grown more slowly than in other segments (currency futures and options markets), the cash market accounts for slightly less than half (about 49%) of the total turnover of the foreign exchange market. Another important segment of the foreign exchange market is the futures market (forward transactions). Participants in this market assume the obligation to buy and sell the currency at the rate set at the time of the transaction, but with the condition of mutual delivery of currencies within the agreed time. Transactions are concluded either for a period of three to seven days, or for 1, 2, 3, 6, 9, 12 and 18 months, or for two or three years, for five years. The object of such transactions can usually be any freely convertible currency.
However, the longer the term of the transaction, the fewer currencies it can cover. The fact is that one of the two main purposes of futures transactions, in addition to extracting speculative profits, is primarily insurance against possible risk caused by changes in exchange rates. Therefore, with terms from three days to six months, it is possible to conclude transactions in almost all convertible currencies used in international settlements. In carrying out transactions for a period of one and two years, such currencies as the Austrian schilling, the Belgian franc, the Spanish peseta, the Italian lira, the Portuguese escudo, and also monetary units Scandinavian countries. In contracts for a period of more than two years, only the leading currencies are used: the US dollar, the German mark, the Swiss franc, the Japanese yen and the British pound sterling. As a rule, when carrying out urgent transactions, banks require certain guarantees from customers in the form of appropriate deposits (except in cases where the counterparty is another bank or financial institution).
The need for such guarantees increases when the underlying currencies fluctuate significantly. Currencies with delivery at a certain time do not have an official quotation, their rates are formed under the influence of market forces, and therefore they differ from the rates of currencies with immediate delivery (spot transactions). Transactions for any period of more than two business days are called forward transactions.
Moreover, if the exchange rate for them is higher than the current "spot" rate, then they say that such a currency is quoted with a premium, but if it is lower than the rate for cash transactions, then we are talking about a discount. In the conditions of stabilization of the foreign exchange market, the volume of futures transactions is reduced in comparison with cash transactions. On the contrary, with significant fluctuations in exchange rates on the spot market, the volume of forward transactions increases. Thus, in recent years, due to the intensification of destabilizing phenomena in the foreign exchange market, the volume of urgent transactions increased faster than the volume of cash transactions. - There are two types of currency transactions in the forward market.
The first type includes ordinary forward transactions, which involve the purchase or sale of currency with maturities of more than two days. The second type is "swap" transactions, which are the simultaneous purchase and sale of currencies with different settlement periods. In this case, the same person always acts as a counterparty.
A "swap" transaction can also be defined as a combination of "spot" transactions and forward transactions ( classic look transactions: "swap" = transaction "spot" + "forward. It should be noted that in addition to traditional transactions such as "spot" and forward transactions in the 70s, relatively new types of transactions (the so-called standard contracts) appeared on the foreign exchange market: currency futures and options.These formed the basis of the corresponding market segments.Currency futures provide the owner with the right and impose on him the obligation to deliver a certain amount of currency by a certain date in the future according to an agreed exchange rate. Outwardly, futures are very similar to forward transactions, but there are the following differences between them: - futures are more standardized, as they are characterized by a standard currency volume and settlement terms; - futures are held on organized markets (futures exchanges); - futures dealers do not trade directly with other dealers, since clearing companies act as intermediaries between them. Currency options give the holder the right, but no obligation, to buy (premium deal, put option) and sell (reverse premium deal, put option) currency by a specified date in the future at an agreed exchange rate.
The main differences between futures and options are as follows: - the owner of the option has the opportunity to buy or sell the currency, but is not required to do so; - in order to buy or sell an option, it is necessary to pay an additional premium to one of the parties. This means that an option, unlike a futures contract, has a fixed price; - trading in options is mainly carried out on the over-the-counter securities market.
The considered segments of the foreign exchange market in modern conditions are undergoing further evolution. As already noted, the cash market practically still retains the first place in terms of the volume of transactions among other segments in the total turnover of the foreign exchange market.
At the same time, the forward market, which includes conventional forward transactions and the swap market, developed much faster than the spot market in the early 1990s.
First of all, this refers to the swap market, which has become the second largest segment of the foreign exchange market (about 40% of turnover in 1992) after the market cash transactions. The volume of transactions with foreign exchange options also increased significantly, although its share in the total turnover of the foreign exchange market remains modest relative to other segments.
Conclusion
Thus, we can say that the foreign exchange market is a mechanism by which legal and economic relationships are established between consumers and sellers of currencies. This is its main functional characteristic.
In addition, the foreign exchange market performs the following functions:
1. Timely implementation of international payments.
2. Regulation of exchange rates.
3. Diversification of foreign exchange reserves.
4. Insurance of currency risks.
Making profit by participants in the foreign exchange market in the form of a difference in exchange rates. In terms of structure, the foreign exchange market can be characterized from different perspectives: content, segments and participants. The foreign exchange market in Russia cannot be called developed compared to the world, but it performs some functions of the domestic foreign exchange market and has structured system in many ways similar to other systems of foreign exchange markets.
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Theoretical aspects formation and functioning of the domestic foreign exchange market Russian Federation. Identification of the main patterns of development of the foreign exchange market. Conducting an analysis of the dynamics of exchange turnover on the main currency pairs for the current year.
thesis, added 01/14/2015
The concept, types and structure of the financial market. The history of development stock market, his legal regulation. Determination of participants in direct and indirect forms of transactions. Features of the functioning of the credit, currency, insurance markets.
currency market broker futures
In the foreign exchange market, operations of various contents are carried out, which are united by the corresponding market segments. The main segments of the interbank foreign exchange market are the cash market (the market for transactions at the current rate, or telegraphic transfer operations, also referred to in Western literature as the "spot" market) and the futures market (or the market for transactions for a period). In the cash market ("slot" market), the purchase and sale of currencies takes place on the terms of settlement within two business days after the date of the transaction and at the rate at the time of its conclusion. The cash market, being a part of the foreign exchange market, also functions continuously. This means that its participants can buy or sell currency during the entire time of its operation. The exchange rate of any currency is set on the spot market in relation to the US dollar, while there may not be a direct correlation between other currencies at a certain moment. Despite the continuous nature of foreign exchange transactions and the constant determination of exchange rates, in some financial centers there is a so-called "fixing" procedure, the duration of which varies in different countries. "Fixing is the process of officially determining the rates of various currencies, i.e. their quotation during periodic meetings of the main market participants, which are held in each financial center.
For example, in Paris, on the premises of the Stock Exchange, since 1977, the fixing procedure has been taking place daily on weekdays for approximately 30 minutes (beginning at 13.30 in winter, and at 14.00 in summer). At the same time, the representative of the French Association of Exchanges announces the rates of the main currencies (the selling and buying rates for each of the currencies) against the French franc, which are then published in the official publication of France.
The difference between the seller's rate and the buyer's rate is called the "spread, or "margin" and represents the income of the bank using the mentioned quotes when conducting foreign exchange transactions. Such an official currency quote allows the clientele of commercial banks to better orient themselves regarding the situation in the foreign exchange market and more accurately formulate their orders to banks The exchange rate of any currency (usually in relation to the US dollar) is expressed as a figure that includes four decimal places, i.e. ten thousandths of 1. In this regard, in the professional terminology of dealers, the concept of "pip", i.e. "point ", denoting 1/10000 of the exchange rate.
For example, the exchange rate of the French franc against the US dollar can be expressed as 5.5950-5.5958, where the first corresponds to the purchase rate, and the second to the sale. In this case, the franc rate can also be represented as the following expression: 5.5950/08, where 08 is the number of "pips", which is the difference between the selling and buying rates, or "spread" ("margin"). The official quotation of currencies (fixing) in one form or another is carried out on most exchanges in the cities of Western Europe: in Amsterdam, Brussels, Madrid, Milan, Paris, Frankfurt am Main. However, the largest of them (London and Zurich) do not have such a quote.
Currently, the cash market ("spot" market) is still the largest segment of the foreign exchange market. Despite the fact that in recent years the volume of trading here has grown more slowly than in other segments (currency futures and options markets), the cash market accounts for slightly less than half (about 49%) of the total turnover of the foreign exchange market. Another important segment of the foreign exchange market is the futures market (forward transactions). Participants in this market assume the obligation to buy and sell the currency at the rate set at the time of the transaction, but with the condition of mutual delivery of currencies within the agreed time. Transactions are concluded either for a period of three to seven days, or for 1, 2, 3, 6, 9, 12 and 18 months, or for two or three years, for five years. The object of such transactions can usually be any freely convertible currency.
However, the longer the term of the transaction, the fewer currencies it can cover. The fact is that one of the two main purposes of futures transactions, in addition to extracting speculative profits, is primarily insurance against possible risk caused by changes in exchange rates. Therefore, with terms from three days to six months, it is possible to conclude transactions in almost all convertible currencies used in international settlements. In carrying out operations for a period of one and two years, such currencies as the Austrian schilling, the Belgian franc, the Spanish peseta, the Italian lira, the Portuguese escudo, as well as the monetary units of the Scandinavian countries, are almost never used. In contracts for a period of more than two years, only the leading currencies are used: the US dollar, the German mark, the Swiss franc, the Japanese yen and the British pound sterling. As a rule, when carrying out urgent transactions, banks require certain guarantees from customers in the form of appropriate deposits (except in cases where the counterparty is another bank or financial institution).
The need for such guarantees increases when the underlying currencies fluctuate significantly. Currencies with delivery at a certain time do not have an official quotation, their rates are formed under the influence of market forces, and therefore they differ from the rates of currencies with immediate delivery (spot transactions). Transactions for any period of more than two business days are called forward transactions.
Moreover, if the exchange rate for them is higher than the current "spot" rate, then they say that such a currency is quoted with a premium, but if it is lower than the rate for cash transactions, then we are talking about a discount. In the conditions of stabilization of the foreign exchange market, the volume of futures transactions is reduced in comparison with cash transactions. On the contrary, with significant fluctuations in exchange rates on the spot market, the volume of forward transactions increases. Thus, in recent years, due to the intensification of destabilizing phenomena in the foreign exchange market, the volume of urgent transactions increased faster than the volume of cash transactions. - There are two types of currency transactions in the forward market.
The first type includes ordinary forward transactions, which involve the purchase or sale of currency with maturities of more than two days. The second type is "swap" transactions, which are the simultaneous purchase and sale of currencies with different settlement periods. In this case, the same person always acts as a counterparty.
A "swap" transaction can also be defined as a combination of "spot" transactions and forward transactions (the classic type of transaction: "swap" = "spot" transaction + "forward". It should be noted that in addition to traditional "spot" transactions and forward transactions in In the 1970s, relatively new types of transactions (the so-called standard contracts) appeared on the foreign exchange market: currency futures and options, which formed the basis for the corresponding market segments. in the future at an agreed exchange rate Externally, futures are very similar to forward transactions, but there are the following differences between them: - futures are more standardized, as they are characterized by standard currency volumes and settlement periods - futures are traded on organized markets (futures exchanges) - dealers futures transactions are not traded directly with other dealers, because as clearing companies act as intermediaries between them. Currency options give the holder the right, but no obligation, to buy (premium deal, put option) and sell (reverse premium deal, put option) currency by a specified date in the future at an agreed exchange rate.
The main differences between futures and options are as follows: - the owner of the option has the opportunity to buy or sell the currency, but is not required to do so; - in order to buy or sell an option, it is necessary to pay an additional premium to one of the parties. This means that an option, unlike a futures contract, has a fixed price; - trading in options is mainly carried out on the over-the-counter securities market.
The considered segments of the foreign exchange market in modern conditions are undergoing further evolution. As already noted, the cash market practically still retains the first place in terms of the volume of transactions among other segments in the total turnover of the foreign exchange market.
At the same time, the forward market, which includes conventional forward transactions and the swap market, developed much faster than the spot market in the early 1990s.
First of all, this refers to the market of "swap" transactions, which has become the second largest segment of the foreign exchange market (about 40% of turnover in 1992) after the market of cash transactions. The volume of transactions with foreign exchange options also increased significantly, although its share in the total turnover of the foreign exchange market remains modest relative to other segments.
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In terms of volume, the foreign exchange market is the largest among all other existing segments of the financial market. Currency trading is dozens of times greater than the volume of all world trade in goods and services. Consequently, most of the foreign exchange transactions are not related to servicing international trade, but represents financial transfers and speculative transactions.
The foreign exchange market is divided into a number of segments in terms of the urgency of the execution of transactions. Here you can distinguish the cash and urgent segments of the market. Let's define the cash market as the market for the exchange of cash currency, where there is a trade in banknotes issued by central banks various countries. Operations with cash currency make up a very small share of the currency market turnover. The population deals with this segment of the foreign exchange market in their daily life. The largest segment of the cash foreign exchange market is the "spot" market, the size of transactions on it is more than 90% of the total volume of transactions on the market. The term of delivery of currency for operations on the spot market does not exceed two banking days. In the spot market, banks and brokers from all over the world collectively form exchange rates currencies that are the base for the foreign exchange market as a whole. In parallel with the spot market, there is an urgent foreign exchange market. The need for the derivatives market is due to the fact that the 1-2-day delivery time of the currency on the spot market turns out to be too short for many foreign trade transactions. In this market, various transactions are carried out that combine longer terms for the supply of currency - from 3 days to several years. The exchange rate of the forward currency market, as a rule, does not coincide with the spot rate, which is explained by differences in the levels interest rates in the money and stock segments of the financial market.
The actions of many participants in the foreign exchange market are often the result of their operations in other segments of the financial market. Thus, the formation of a huge and capacious international loan capital market, including the Eurocapital market, involves the performance of foreign exchange transactions, without which transactions with financial assets impossible. The rapid development of integration processes, the universalization of all segments of the financial market, the emergence of new financial instruments, including derivatives (derivatives), in the context of liberalization and deregulation of international monetary relations, has greatly increased the need to protect against newly emerging risks and created new problems at the macro level for national bodies of currency regulation and control in terms of developing both unified definitions and rules for conducting transactions in all segments of the currency markets. At the micro level, the need to develop universal concepts and rules for dealing transactions for the purchase and sale of foreign currencies is determined directly by foreign economic transactions of counterparties from various countries. Transactions with goods and services outside national borders, as well as investments in other countries, are paid in foreign currency. Businesses that receive or pay for goods and services in foreign currencies are exposed to exchange rate risks. Enterprises in Europe, by entering into an agreement with an American partner for payment in US dollars, do not assume the risk of a negative change in the dollar exchange rate and the final payment date. In the case of payment in euros, the exchange rate risk is transferred to the US company. A European importer who ships goods from the US and is required to pay in dollars converts the euros into dollars through their servicing bank. In writing or by phone, he instructs the bank to deduct euros from his account and convert the equivalent of the payment into dollars. In the foreign exchange market, the bank buys the necessary amount of dollars for euros, delivers them to the client and debits his account in euros.
If an exporter from Europe who delivers goods to the United States and receives payment in dollars wants to exchange them for euros, then after receiving the payment in foreign currency, he instructs the bank to sell dollars for him and credit their equivalent in euros to his account. The bank sells dollars on the exchange or over-the-counter segments of the foreign exchange market, buys euros and credits them to the exporter's account. The purchase of securities quoted in a foreign currency also involves transactions with this currency.
Concepts characterizing the general conditions of insurance activities
Insurance contract - an agreement between the policyholder and the insurer, by virtue of which the insurer undertakes to insured event produce insurance payment to the policyholder or a third party in whose favor the insurance contract is concluded, and ...
Exchange classification
Depending on the assets (instruments) being traded, exchanges are divided into: commodity (commodity exchange) - permanent wholesale market pure competition, in which purchase and sale transactions are made according to certain rules ...
Procedure for execution of depository operations
The execution of custody operations is divided into the following stages: · acceptance of an order and accompanying documents from the initiator of the operation; Checking the authority of the initiator of the operation, the completeness and correctness of the execution of the order and accompanying persons...
The main segments of the Russian foreign exchange market are stock exchanges and the interbank foreign exchange market.
Currency exchanges play an important role because exchange rates and transaction volumes based on the results of trading on exchanges serve as a guide for transactions in the interbank and futures currency markets.
The mechanism of trading on exchanges is the same everywhere, although each exchange has its own characteristics in the procedure for conducting and organizing trading.
Before the start of trading, dealers representing participants inform the exchange broker of applications for the purchase and sale of foreign currency. The minimum amount of buying or selling currency (lot) is 10,000 dollars. or euro for exchange trading in the corresponding currency. The rate fixed at the previous auction is used as the initial one.
At the beginning of trading, the exchange broker reports on the amounts of orders for the purchase and sale of currency. If the total volume of currency supply at the beginning of trading exceeds the total volume of demand, then the exchange broker lowers the exchange rate of the foreign currency against the ruble, and trading participants can place additional orders for the purchase of currency and (or) withdraw their orders for sale. If at the beginning of an exchange session the volume of supply is less than the volume of demand, then when the exchange rate of a foreign currency rises against the ruble, trading participants can place additional orders for the sale of currency and (or) withdraw their orders for the purchase of foreign currency.
If demand and supply are equal, a fixed exchange rate is set for the current trading of foreign currency against the ruble, i.e. fixing. At this rate, all concluded transactions are calculated. The exchange collects a commission from trading participants in the amount, as a rule, not exceeding 0.15-0.2% of the volume of net purchases (in foreign currency) or net sales (in rubles). After the completion of the auction, all participants receive exchange certificates and transaction sheets. Settlement times on various exchanges vary from 0 to 7 days.
Taking into account the formation of a single market for trading in government securities, it became necessary to create a single exchange market with the unification of the settlement system on regional currency exchanges.
The interbank foreign exchange market has a high competitive position compared to stock market, since the existing risks are offset by the speed of transferring funds. It is dominated by short and ultra-short transactions with the delivery of currencies on the day of the transaction or the next day.
Prospects for the development of the foreign exchange market in Russia are associated with the development of the interbank foreign exchange market. In certain periods, the interbank foreign exchange market is several times ahead of the exchange market in terms of the volume of transactions. However, banking crises, especially the default in August 1998, showed that this market does not have a sufficiently stable institutional structure and cannot do without the support of the Central Bank of the Russian Federation.
