Exchange transactions: types, characteristics and features

Mutual actions of participants of a specific form of purchase and sale of tangible assets, called "trading", are called the term "stock transactions". The types of such coordinated activities are divided into four broad types. They, in turn, involve transactions, the subject of which are various kinds of goods and assets owned by numerous funds. Types of exchange transactions and their characteristics are presented in our article.

General theoretical information

Exchange transactions, the concept and types of which are directly in the field of active actions of their participants, are aimed at acquisition (or alienation) of rights and obligations associated with goods purchased under a specific type of contract of sale. In the course of such transactions, objects that have access to the appraisal and exhibition at the auction are transferred.

As a rule, the processes of the so-called exchange game are characterized by analysts from several sides. They are considered from the point of view of conformity to legal, economic and simple organizational and ethical norms.

Such are the exchange transactions, the types of which may be the following list:

• The supply of products accompanied by the presentation of their quality samples;
• Conclusion of contracts on the supply of goods;
• Agreements that involve the transfer of property in the property on condition of non-payment;
• Reaching agreements that result in the right (but not the obligation) to purchase certain securities or specific goods during the agreed term.

Securing the bidding procedure

The right to establish specific procedures for the implementation of the trading procedure on the exchange is owned by each individual organization that accepts sellers and buyers operating in a special legal field. The same for each institution, called the exchange, is the requirement of a written form of agreement between bidders.

In the current sample of the document evidencing the fact of the transaction, the following should be written:

• A specific time period within which the subject of trade should go to the recipient;
• The number of units of the goods;
• Indicators on which one can judge the conformity of the acquired material goods with their quality standards;
• Tribal affiliation of the subject matter of the transaction;
• Terms and form of payment under the contract;
• Nuances of delivery and the degree of responsibility of the parties.

Within the framework of a fixed-term contract, only the last two items from the list are discussed. The price, as a rule, is called conditional. Such arrangements are called futures.

Contracts that give the right to purchase goods and do not provide for obligations are sold as a special kind of securities, called options. The bidder who purchases such a document along with him becomes the owner of the right to purchase a specific product within a specified period. At the same time, these securities can be used both for the purpose and sell, transferring with it the opportunity to purchase the object specified in them.

Cash transactions

One of the varieties of exchange agreements is the so-called transaction of immediate execution. Within their framework, the transfer of securities and settlement takes place on the day of signing the contract. Another type of exchange transactions are fixed-term contracts, the content of which is the purchase and sale of foreign currency.

Immediate execution transactions are referred to as cash and can be simple contracts and agreements with the expected profit. At the same time, based on world practice, payment for transferred securities should be made immediately or not later than the fifth working day after the signing of the relevant documents. If the acquired package includes more than 100 shares, the calculation can be made within two weeks.

The Russian stock market sets several other terms for payment on immediate execution deals. The funds must be transferred no later than two days. In the same conventional transactions, the calculation can take three months.

Futures contracts

Such agreements require the sounding of specific payment terms and the date of their signing, as well as a transparent form of setting the value. The types of these contracts have a clear division, based on the following characteristics:

• The calendar period in which the fee may be paid (the number of days specified and documented in advance);
• Date of the decision on the value (it may be the day of the transaction or any other number);
• Nuances of the conclusion of the contract, which primarily depend on its type (with the demonstration of the subject matter of the agreement, individual, option, etc.).

In general, such transactions are divided into two types:

• Shelving (when a participant of such a contract has the legal right to act as the seller and vice versa at the expiration of the agreed period);
• Report (mutual agreement on the transfer of securities, under which the receiving party undertakes to subsequently buy them at a higher rate).

There are also stock transactions, the types of which, upon their conclusion, presuppose a procedure during which one of the parties to the contract receives the right to demand from other delivery of securities, the number of which can be multiplied by a certain coefficient. The cost of each, however, remains fixed and equal to the one that was marked at the time of the conclusion of the agreement.

Transaction with subsequent redemption, option and speculation

The conclusion of contracts on the type of "report" is included in the main types of exchange transactions and is one of the types of agreements with deferred settlement, which is associated with the lack of stability in the foreign exchange market. In addition to these, such transactions include transactions in which securities are transferred for remuneration to a pre-selected intermediary. Intermediate possession lasts for a specified period and is paid at a price lower than that established for subsequent redemption.

Transactions, on the conclusion of which the right to purchase goods arises, presupposes payment after the specified period, which can not be less than one working week and more than two months. In the event that the settlement date coincides with the calendar day off, the obligation to pay the amount due is automatically renewed until the nearest weekday.

It is worth noting that the types and characteristics of exchange transactions can not be described in full without mentioning speculations carried out in the bidding. In this case, despite the negative connotation of this term, such operations by many specialists are called useful. First of all, this is due to the fact that speculative transactions in some way hinder the imbalance of prices and even counterbalance them.

Trading Rules

Exchange transactions are concluded in writing by prior arrangement. In addition, there is an offer made through a detailed description of the conditions in letters, messages on the Internet, telephone conversations, etc.

Those participants of the exchange game, which can be ranked as professionals, usually conclude deals only in their name and for their means. On them, according to the rules of the institution, it is the duty to voice prices in advance and not to deviate from them during the entire auction.

Such transactions are invariably registered, which occurs only if there is a document duly executed. On this document, the relevant authority makes a note and assigns a personal serial number to it. Having received a security, its new owner is obliged to notify the person issuing it.

Subjects and objects of contracts on the exchange

Since the games in the stock market are carried out according to strictly established rules, which form a clear structure and mechanisms of the ongoing processes, a list of their participants is clearly regulated. These include:

• Subjects acting within the framework of the exchange game solely on their behalf (traders);
• Legal or natural persons having legal status of the founders of tenders;
• Brokers carrying out their actions on behalf of and on behalf of clients.

All the above-mentioned participants, carrying out their actions, consider as objects of transactions:

• Different kinds of goods;
• Raw materials;
• Shares;
• Derivatives from the main product or service financial documents (derivatives);
• National currency.

Individuals who organize the game on the exchange provide direct legal assistance to individual traders, and also carry out general consultations for each and every participant of the auction, if the types of exchange transactions and the procedure for their execution stipulate such a need.

Goods and basic bidding procedures

Speaking in more detail about what kind of financial products are put up for sale as part of the exchange game, the following are highlighted:

• Products of industrial production;
• Consumables intended for processing;
• Goods in the field of agriculture.

The price of the listed items of trade is formed in the process of operation of the exchange's mechanisms. The basis of these is, as a rule, free structuring of prices, however, depending directly on the rules established by the institution that conducts trades, especially those who supervise types of exchange transactions with real goods.

The main list of financial transactions carried out in the framework of such activities includes:

• Purchase and sale;
• Procedure for entering securities on the list admitted to trading;
• Control of the compliance of securities with the requirements set by the exchange (and also the processes of the exchange game - prescribed conditions);
• Registration of agreements reached;
• Setting prices for basic and quoted currencies;
• Realization of pledge procedures;
• Legal support of settlements;
• Cash and non-cash payment of invoices;
• Conducting statistics for the purpose of studying the financial market and providing relevant information;
• Services for ensuring the safety of funds;
• Issue of securities.

Price formation

In the framework of the exchange game, the value of assets in general and securities in particular is set depending on several conditions:

• The results of agreements of free traders (traders);
• Consistent with current market patterns (taking into account modern macroeconomics);
• Based on the basic principles of auction bidding.

At the same time, the prices established during negotiations are somehow based on the nature of the current market, which is often the main source of information that is being appealed to, making a choice toward a particular final decision.

Agreements, which come to the parties within the framework of rivalry by auction type, also fall into the category of "exchange transactions". Types of such contracts have a number of characteristic features and are of great interest, being a special financial institution.

Features of auctions

Public auction, held as part of the exchange game, is clearly divided into two main types - ordinary (classic) or double. The first include those in the course of which, due to the relatively small demand for the offered goods, in tough competition among themselves are precisely the sellers. The second type presupposes active interaction and rivalry between purchasers as dictated by the types and purposes of exchange Transactions.

The classic type of auction is the British option of bidding, the characteristic feature of which is the increase in price in the process - from the minimum to the one on which the product will eventually be sold.

Applications for participation in trades in the status of sellers are submitted in advance, which is necessary for the study, the initial stock assessment of the proposed products and the formation of the list of listed products. In advance, and the size of the step, which will increase their value during the auction game, is also established.