The market forms its infrastructure. Market infrastructure is a set of organizations, institutions, enterprises and services that serve and ensure the movement of goods and services, capital and labor, i.e. ensure the normal functioning of the market. It includes a network of commercial banks and other financial institutions; commodity and stock exchanges, trading houses, labor exchanges; information and commercial centers; wholesale and intermediary firms; supply and marketing organizations; insurance companies; audit firms; auctions, fairs; marketing centers, training of managers, brokers, dealers and other services.
As part of the market infrastructure, three most important blocks can be distinguished:
organizational base, including exchanges, supply and sales firms, trading houses, intermediary firms, brokerage offices, leasing, audit firms, etc .; material base is a transport system, warehouse and packaging facilities, means of communication, information base, machines, mechanisms; credit and settlement base, consisting of the banking system, credit and savings structures, budget system, etc.
Let’s briefly describe the most important elements of the infrastructure.
A commodity exchange is an institution in which wholesale transactions are carried out for the purchase and sale of goods according to samples and standards on the basis of preliminary exchange expertise. On the commodity exchange, as a rule, not the goods themselves are bought and sold, but contracts for their supply. The advantage of commodity exchanges is that here the buyer freely chooses the seller, as well as vice versa, that prices are formed under the influence of supply and demand, that trading is conducted according to uniform exchange rules, and the standard form of contracts simplifies trading as much as possible. Commodity exchanges have been operating in Belarus since 1991.
There are specialized and universal exchanges, public and private. On specialized exchanges, the object of the transaction is a certain type of homogeneous product (copper, aluminum, nickel, precious metals, cotton, wool, gasoline, rubber, potatoes and some others), on universal exchanges – many goods.
On commodity exchanges, on behalf of their clients, broker intermediaries conclude transactions. In the role of such can be both highly qualified specialists who are well aware of the legal rules of registration of transactions, market conditions, and brokerage firms registered on exchanges and representing the interests of their clients. The source of income of the broker is the commission fee provided for in the charter of the relevant exchange. The subjects of the commodity exchange are also dealers – trading participants who carry out exchange transactions on their own behalf and at their own expense.
By their nature, exchange transactions act in two varieties. Transactions for real goods are called “spot” transactions. They give guarantees for the sale of the goods that are already available. In such transactions, the manufacturer is exposed to the risk of price changes at the stage of production of goods. Therefore, “forward” transactions are becoming increasingly common in stock trading, guaranteeing the delivery of goods at the right time and at prices that provide an appropriate profit. In such a transaction, it is not the goods themselves that are sold, which have not even been produced yet, but the right to receive it.
A type of forward transactions are “futures” transactions. These are deals on the “commodity of the future”. In this transaction, the partners do not expect to transfer the goods sold to each other. The purpose of a futures transaction is to obtain a difference in price for the period between the conclusion of the contract and its execution. At the same time, the system of futures contracts allows you to protect the prices of goods from the influence of random factors, is a kind of guarantor for both sellers and buyers.
Auctions are the public sale of specific goods or their samples on the basis of bidding at a predetermined time and in a predetermined place.
Fair – regional auctions organized at a certain time (Sundays, holidays, etc.).
A stock exchange is an organization of trading enterprises and persons created for the free purchase and sale of securities at market prices. The purchase and sale of securities on the stock exchange is carried out on the basis of their exchange rate, which fluctuates depending on the ratio between supply and demand. Registered exchange rates (stock quotes) are published in special exchange bulletins. Currently, the prevailing volume of securities trading falls on the international exchanges of major financial centers in New York, London, Paris, Frankfurt am Main, Tokyo, Zurich. There is also a stock exchange in the Republic of Belarus.
The implementation of the functions of the stock exchange is impossible without the participation of intermediaries operating on it – brokers and dealers. The broker only brings the seller of securities with their buyer, receiving a commission for this, and the investment dealer also buys securities in his own name and at his own expense in order to resell them. The proceeds from the resale form his profit. Recently, more and more large firms are engaged in intermediation on the stock exchange, integrating brokerage and dealer operations in their work.
The modern stock exchange is a heavy-duty computer center that has the means of operational communication with almost the entire world. All trades are entered into the memory of the machine, and information about the market is distributed in a matter of seconds.
The labor exchange is an organization specializing in the execution of intermediary operations between entrepreneurs and workers for the purpose of buying and selling labor. It makes it possible to streamline the hiring of labor by enterprises and reduce the time for citizens to find a job. In addition to employment activities, these exchanges provide services to persons wishing to change their place of work, study the supply and demand of labor, collect and disseminate information on the level of employment in relation to certain professions and regions. Under the existing laws of most countries, all vacancies in enterprises must be registered on local exchanges.
An important function of the labor exchange is the material support of workers in the event of forced unemployment. Based on the established practice of foreign countries, the following criteria are used to determine the status of the unemployed: employment before the loss of employment; active job search; registration with the State Employment Service; non-rejection of an offer of employment by the employment service, provided that suitable employment is provided; lack of other sources of income.
Means of support for the unemployed are formed from certain sources. The state creates a special employment fund, which is formed at the expense of deductions from enterprises and organizations, and, if necessary, subsidies from the state budget. In a number of countries (Japan, the USA, Germany), such a special fund is created at the expense of the deductions of the employees themselves, as well as at the expense of contributions from the state budget.
The credit system is a set of banks and other credit and financial institutions that mobilize free monetary resources and provide them in a loan using tools specially designed for this purpose. The core of the credit infrastructure is the banking system. Banks are financial organizations that issue, store, provide, distribute, exchange and control funds and the circulation of money and securities. In a market economy, banks represent a powerful tool for structural policy and regulation of the economy, carried out by redistributing finance, capital in the form of bank lending to investments necessary for entrepreneurial activity.
The banking system includes a central (issuing) bank that has the right to issue bank notes; commercial, or depository, banks engaged in a wide range of operations, including the provision of loans; investment banks specializing in financing and long-term lending of investments of various enterprises and entire industries; mortgage banks that build their activities on the provision of long-term loans secured by real estate; innovative banks that lend to the process of creating and implementing various innovations and scientific and technical developments; savings banks that accumulate free cash of the population, provide loans, conduct settlement and monetary operations to serve the population.
In an active influence on the course of economic development, the central bank has its own tools. Thus, limiting or increasing the issue of money into national economic circulation, the bank significantly affects the state of the money market. In most market economies, the central bank enjoys administrative autonomy. By varying the rate of interest for the loan that the central bank provides to all other banks, it facilitates or complicates access to these loans and thereby affects the state of investment policy. In addition to issues, the instruments of direct regulation are economic standards that control the activities of commercial banks (requirements for the authorized capital, solvency ratios, liquidity, maximum risk per borrower, maximum size of active operations, investment activity standards). The instruments for regulating the actions of commercial banks are the discount (interest) rate, open market operations in terms of buying or selling securities, the reserve rate, and the establishment of required reserve ratios. So commercial banks are required by law to keep part of their funds (usually 5-10%) in the central bank. During inflation, in order to restrain the growth of the mass of money, the central bank raises the rate of required reserves, in the opposite situation, the reserve rate decreases.
Public finances are also included in the market infrastructure. They are based on central and local budgets. Through the state budget, there is a redistribution of income, financing of social programs.
An important part of the market infrastructure is an extensive system of legislation that regulates the legal relations of economic entities and determines the rules of the “market game”.
Thus, it can be concluded that all elements of the market infrastructure operating within special markets and performing certain functions contribute to the implementation of the main function of the infrastructure – to connect all spheres of production and exchange with each other in order to create organizational and economic conditions for the development of the market.