1. Ukrainian Academy of Banking of the National Bank of Ukraine Banking Department Banking Lecture 3 Financial market Anna Vladimirovna Buriak, Ph.D., Senior Lecturer at Banking Department

2. Agenda 1. Active vocabulary. 2. Financial market 3. Exchange and OTC market (article for discussing)

3. 1. Active vocabulary  market  market: -stock market (фондовая биржа) – stock exchange -Money market and capital market -Over-the-counter market (внебиржевой рынок ценных бумаг) -Primary and secondary (первичный и вторичный)  Securities (ценные бумаги) -credit against securities (кредит под ценные бумаги); -government securities (государственные ценные бумаги; -issue of securities (выпуск ценных бумаг)  Stock (shares) акции -common stock (обычные акции) -preferred stock (привилегированные акции)  Bond (облигация)  Bond (облигация) - government / амер. Treasury/ bonds — государственные облигации

4. 1. Financial market A financial market is a market in which people and entities can trade financial securities any marketplace where buyers and sellers participate in the trade of assets

5. 1. Financial market Financial market participants Lenders Who have enough money to lend or to give someone money from own pocket at the condition of getting back the principal amount or with some interest or charge Individuals  puts money in a savings account at a bank;  contributes to a pension plan; Companies When companies have surplus cash that is not needed for a short period of time, they may seek to make money from their cash surplus by lending it via short term

6. 1. Financial market Financial market participants Borrowers Individuals (borrow money via bankers' loans for short term needs or longer term mortgages) Companies (borrow money to aid short term or long term cash flows) Governments (find their spending requirements exceed their tax revenues. To make up this difference, they need to borrows)

7. 1. Financial market Financial market participants Financial Intermediaries Banks Insurance Companies Pension Funds Mutual Funds

8. 1. Financial market Financial market functions  Providing the borrower with funds so as to enable them to carry out their investment plans  Providing the lenders with earning assets so as to enable them to earn wealth  Providing liquidity in the market so as to facilitate trading of funds.  it provides liquidity to commercial bank  it facilitates credit creation  it promotes savings  it promotes investment

9. 1. Financial market Financial market types  Money market: market for dealing with financial assets and securities which have a maturity period of up to one year. In other words, it’s a market for purely short term funds.  Capital market: market for financial assets which have a long maturity.

10. 1. Financial market Financial market types Capital market Bonds market Stock Markets primary new issues are first offered secondary

11. 1. Financial market Financial market types Derivatives Markets (forwards, futures, options, swaps and contracts-for-difference (CFDs) Interbank Markets (financial system and trading of currencies among banks and financial institutions) Forex (where currencies are traded)

12. 1. Financial market Financial market types Stock market The over-the-counter (OTC) market – Securities are not trading on a stock exchange