Editura Universitara Capital Markets

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ISBN: 978-606-28-0825-9

DOI: 10.5682/9786062808259

Publisher year: 2018

Edition: I

Pages: 154

Publisher: Universitară

Author: Oana Mionel

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Capital markets are markets in which buyers and sellers trade financial securities, such as bonds and shares. Purchases and sales of financial securities are made by individuals and institutions. Capital markets channel financial funds from those who have them to those who need them. Capital markets are made up of primary markets and secondary markets. The primary markets deal with the issuance of new shares / bonds, while the secondary markets deal with transactions in securities on stock exchanges.
At the origin of what we call today commodity exchanges or stock exchanges / financial markets are the places where real and financial products were exchanged in the past. The oldest example of the organized market of financial securities can be found in 2nd century AD Rome. The trading place in Rome was the Roman Forum described by the Russian historian Mikhail Rostovtzeff (1870 - 1952) as follows: "a lot of people who buy and sell shares and bonds of tax collection companies, various goods for money or credit, agricultural and real estate farms in Italy and in the provinces, houses and shops in Rome, ships, warehouses, slaves and cattle ".
However, the name of the stock exchange term (XIII - XIV centuries) seems to come from the name of an old family of innkeepers van der Buerse (from Bruges - Belgium) who founded a place called Hotel des Buerse precious metals (gold, silver, platinum) and securities.
OANA MIONEL
Doctor in economics, title awarded by the Academy of Economic Studies and, at the same time, associate professor at the Faculty of International Economic Relations within the "Dimitrie Cantemir" Christian University.
The author of this paper teaches at the mentioned faculty the subjects: Technique of international payments and financing and International stock exchanges.

1. COMPANIES AND CAPITAL MARKETS / 7
Hierarchy of investors in a company / 7
Risks of investing in a company / 9
Capital markets and stock exchanges / 11
Characteristics of stock exchanges / 19
Financial instruments traded on stock exchanges / 24

2. ACTIONS AND TRANSACTIONS WITH SHARES / 28
Shares as property rights / 28
Stock exchanges and stock market indices / 31
Emotion, fear and greed / 32
Short sale of shares / 33
Margin and sale without coverage / 34
Characteristics and typology of actions / 35
The symbol and value of an action / 39
Initial public offer / 41
Planning and process of issuing shares / 44
How can money be invested in shares? / 49

3. BONDS AND LOANS / 52
Key terms in the use of oligations / 53
Bond rating / 56
Public offer and private placement / 57
Issue, listing and post-listing in Romania / 58
Ways of investing in bonds / 62
Issuance of bonds at international level / 62
Taxonomy of bonds / 65

4. FUTURES, OPTIONS, SWAP / 74
Derivatives: the underlying asset and the derivative itself / 74
Futures and futures contracts / 77
Standardization of futures contracts / 77
Clearing house in financial transactions / 79
Hedgers, speculators and arbitrators / 80
Options and contracts options / 83
Typology of options / 86
Elements of the options / 87 contract
The mechanism of options / 91 contracts
Investitia in options / 92
Stock market contracts / 93
Interest rate and commodity swap / 94

5. LARGE INTERNATIONAL STOCK EXCHANGE / 98
Intercontinental Exchange - New York Stock Exchange / 98
Japan Exchange Group / 104
London Stock Exchange / 107
Scholarship members in international practice / 110

6. STOCK EXCHANGE INDICES / 112
Benchmark for world economies / 112
Utility and calculation procedure / 113
Stock index categories / 115
International stock market index / 116
Dow Jones Industrial Average / 116
Standard & Poor’s Index 500 Composite / 119
NASDAQ Index 100/119
FTSE 100 Index / 120
Nikkei Index 225 / 121
DAX Index 30 / 121
Continuous Assisted Rating 40 / 122
Russell Global Index / 122
MSCI EAFE index / 123
Stock market indices in Romania / 124
Bucharest Exchange Trading Index / 124
Index BET-BK / 126
BET-FI index / 127
BET-NG index / 128
ROTX index / 129

7. CAPITAL MARKET IN ROMANIA / 130
Investors and investments on the Romanian capital market / 131
Bucharest Stock Exchange / 133
Financial Investment Services Companies / 141
Financial Supervisory Authority / 143
Central Depository / 144
Clearing Houses / 146
Institute of Corporate Governance / 146
Investor Compensation Fund / 146

BIBLIOGRAPHY / 148

Capital markets are markets in which buyers and sellers trade financial securities, such as bonds and shares. Purchases and sales of financial securities are made by individuals and institutions. Capital markets channel financial funds from those who have them to those who need them. Capital markets are made up of primary markets and secondary markets. The primary markets deal with the issuance of new shares / bonds, while the secondary markets deal with transactions in securities on stock exchanges.
At the origin of what we call today commodity exchanges or stock exchanges / financial markets are the places where real and financial products were exchanged in the past. The oldest example of the organized market of financial securities can be found in 2nd century AD Rome. The trading place in Rome was the Roman Forum described by the Russian historian Mikhail Rostovtzeff (1870 - 1952) as follows: "a lot of people who buy and sell shares and bonds of tax collection companies, various goods for money or credit, agricultural and real estate farms in Italy and in the provinces, houses and shops in Rome, ships, warehouses, slaves and cattle ".
However, the name of the stock exchange term (XIII - XIV centuries) seems to come from the name of an old family of innkeepers van der Buerse (from Bruges - Belgium) who founded a place called Hotel des Buerse precious metals (gold, silver, platinum) and securities.
Royal Exchange (1565 - 1567). In the 16th century, London was an important commercial center. Merchants from all over Europe came to London to sell their goods through shops, houses, taverns and even on the street. To eliminate the random sale of goods, Sir Thomas Gresham built the Royal Exchange (1565-1567) as an organized and regulated institution where merchants and bankers could meet and sell goods.
Amsterdam Stock Exchange (1602). The Amsterdam Stock Exchange - now known as Euronext Amsterdam - is considered to be the oldest stock exchange in the Netherlands and the first to introduce continuous trading. The first company to issue and trade shares and bonds on the Amsterdam Stock Exchange was the Dutch East India Company, whose business was based on the marketing of spices brought from Asia. The increase of the share capital determined the company to sell shares to the public and to accept the new shareholders as part of the business.
Tulipomania (1630 - 1637). Tulip mania or tulip madness had its epicenter in the Netherlands (Amsterdam) or as it is now known as Tulip Country. The economic and cultural development of the Netherlands since the seventeenth century (a situation that continues today) laid the foundations for the creation of financial instruments whose innovation continues today. Brought from Turkey in 1593 by a well-known European botanist (Charles de l'Écluse) of that time, the tulip began to become for the Dutch the favorite flower and emblem of social status, causing those who loved this flower to create even a tulip tree. in which the tulips are arranged so that each flower is noticed.
The passage of time has caused this passion for tulips to turn into a rage for these flowers. The triggering moment was when a new variety of tulips (Viceregele or Semper Augustus) appeared on the market, red with white or red with yellow, the main cause of the appearance being a plant virus. Therefore, this type of tulip was much more difficult to obtain, thus giving it a rarity and a much higher price. They appeared on the market together with beauty lovers and simple investors who wanted to make financial speculations with this commodity. The hypotheses that tried to explain the collapse of the tulip market in 1637 are multiple: from the existence of a speculative bubble that at some point must break and to the presentation of the situation in which the Dutch parliament changed the legislation on contracts of sale - purchase of tulip bulbs. Until the date of the change of legislation, there were forward sale-purchase contracts, contracts which provided that the buyer was obliged to buy the goods at the established term and at the established price regardless of the price fluctuations existing in the market. After the change took place, the futures contracts were transformed into option contracts which provided that the buyer had the right, but not the obligation, to purchase the goods at the established price and in exchange for a premium paid.
At the end of 1636, when investors in tulip bulb transactions learned about the legislative changes, the transactions were boosted, and people rushed to do business with tulips as much as they could, causing prices to rise. Changing regulations has made such investments risky in the future; through therefore, in February 1637, those who had bulbs for sale could no longer find buyers willing to pay the high prices demanded, and at that time the market collapsed, prices falling sharply.
History of Wall Street (1653) and the New York Stock Exchange (1789). When we hear the words Wall Street, the thought immediately leads us to the STOCK EXCHANGE and to the artery on which the world's largest stock exchange companies and financial institutions have concentrated over time. Where the United States now existed, in the seventeenth century there were nine English colonies and one Dutch colony called the New Netherland. It included a Manhattan island with a small New Amsterdam settlement of about 300 inhabitants whose main occupation was cattle raising (over time, New Amsterdam developed and became a mega-metropolis). In 1644, a large Dutch trading company based in New Amsterdam wanted to stop the unhindered movement of cattle through the island and requested the erection of a fence in a well-established perimeter where residents could keep their cattle. A few years later, in 1653, New Amsterdam was occupied by the English. Once occupied, the English wanted to change its name, giving it a local name that had to do with the old homeland, England and the new word. Finally, someone from Yorkshire said "York" plus the word "new" resulted in New York. The second change desired by the English was to demolish the fence. The dismantling of the fence being much too complicated, requiring a lot of labor, it was agreed to set it on fire. Everything burned around him except for one alley that surrounded him and was called "Wall Street" or the English name "Wall Street".
The New York Stock Exchange (NYSE) was born in 1789, when Congress took over the debts of the new colonies and the government by issuing so-called "government notes," creating a new type of investment instrument whose name would be securities (shares - parts owned by a company and bonds or bonds - agreement on debts). Also during this period, new traders appeared who sold and bought these securities; they have been called brokers or brokers or stockbrokers, and the company in which they will work will be called a brokerage company or furniture brokerage agency. The transactions took place every day under the sycamore at number 68-70 on Wall Street (now considered the ancestor of the stock exchange ring), because in 1792, 24 brokers signed an agreement of the brokers by which they created at that time the first stock exchange. organized in New York. In 1870, the NYSE moved to a new location (also on Wall Street) where it still operates today. The beginning and the end of a trading day were marked by a gong - a tradition that is still preserved today - later adopted by all securities markets. If when there were only a few securities traded, brokers could retain "closing prices" and start the day with "opening prices", over time, the number of traded securities increased, as well as that of clients and brokers, becoming increasingly difficult to retain prices for all securities. Thus, it was agreed that for each security the following data must be retained: the full name of the traded security; the abbreviated name of the traded security (called a symbol or ticker); number of transactions made (volume); the highest daytime price of the title (high); the lowest price per day (low); "closing price"; "opening price" (the price at which the transaction started - open); the price of the last overnight transaction (logically it should be equal to the closing price, but it may be different if the stock exchange accepts the execution of transactions even after closing, this activity being called after hours trading); how much the price of a security decreased or increased as a percentage (%); how much the price of a title (change) has decreased or increased algebraically.
All this information was written on slate tablets considered small, light and very easy to erase, so that what was not interesting disappeared and only the "precious" information remained.
Chicago Board of Trade (CBOT - 1848). CBOT is the first stock exchange in the world where standardized futures contracts were traded, being called futures contracts. These contracts standardized: grain quality, grain quantity, time and place for grain delivery. The price in futures contracts was open to trading in the stock exchange ring. These grain futures were the basis for the financial and commodity futures contracts in use today.
Tokyo Stock Exchange (1878). The Tokyo Stock Exchange was established in 1878, when a system of financial securities was established and the first public negotiation began.

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