Topic. 1: Economic essence, role and functions of international exchange activity

International stock exchange activity has developed over many centuries in order to achieve the modern level of perfection inherent in today's international stock exchange platforms.

The development of international stock exchange trading, the emergence and evolution of stock exchange trading technology, were closely related to the formation of our civilization, changes in production technologies, the emergence of an organized form of trade in goods and financial assets.

Given that international stock exchange activity is also a form of wholesale trade, one can trace the gradual improvement and development of international trade in goods, and later in other financial assets.

In our opinion, the stages of development of international stock exchange trading are associated with the prerequisites for the introduction of stock exchange trading in commodity markets. Today, stock exchange trading is a highly developed market mechanism, but several centuries ago, society gradually developed and implemented various types of trading activities.

Given that international exchange trading requires competitive advantages and operates only in the presence of a market environment, not all countries in the world have fully-fledged organized markets for goods and financial assets.

Before the emergence of international exchange activity, trade activity in the areas of retail and wholesale trade emerged and evolved in the world.

International exchange trade arose on the basis of commodity exchange or barter transactions, later on local markets or bazaars, fairs and auctions. It should not be forgotten that the historical development of international trade and the forms of trade and commercial relations influenced the nature of future international exchange trading transactions.

Commodity exchange and barter took place at the dawn of civilization, in other words, thousands of years ago. Historical sources indicate that barter was used by people six or even ten thousand years ago. Nowadays, barter is also often used in conditions of any economic or financial crises of a national or international scale. Barter guarantees the granting of ownership rights to other persons to use the specified commodity assets without the presence of monetary units in the relationship. The exchange takes place without the use of valuable things that can replace money.

Historically, the first barter took place in ancient Mesopotamia, and after it was used by Phoenician tribes between their members and with traders from other countries. Later, the Babylonians began to use more complex exchange operations. They gradually began to exchange goods for precious metals or weapons.

Much later, barter was used in countries where an economy based on monetary settlements was impossible or where there were unstable economic relations, the result of which was inflation and a significant shortage of monetary units or currency. In the 90s of the last century, barter was also widely used in Ukraine.

Barter was also used in Scandinavia during military operations. In 1936, a group of Swiss entrepreneurs created an economic cooperative (wirtschaftsring), which became a fairly powerful barter operation. In 1979, a similar organization was opened in the USA - the International Association of Reciprocal Trade.

Barter transactions are carried out by participants in both domestic and foreign markets. International barter transactions were distinguished by the fact that they could involve import-export transactions without monetary settlements between banks. In international barter, equivalence must be achieved by balancing the cost of commodity exchange transactions at world prices.

The main disadvantages of barter trade are:

- the complexity of finding the necessary trading partners;

- problems in determining the value of assets;

- consideration of legal disputes that may occur during barter transactions.

 

According to the Economic Code of Ukraine, the subjects of barter transactions are individuals and legal entities. All legal features of barter transactions are also determined by the articles of the Civil Code of Ukraine.

After barter, regional markets or bazaars appeared. Local markets are organized places for carrying out trade transactions, that is, they represented an economic mechanism that unites the behavior of buyers and sellers participating in the process of buying or selling commodity assets.

A market is an organized place where supply and demand meet. Markets can be analyzed from different points of view. One of the most common criteria for classifying markets is their division into types by geography of service:

- local;

- global;

- domestic;

- iternational.

Local markets are limited to local service and have a limit on the number of market participants, there are direct contracts between customers and suppliers, goods and services adapted to the needs of local market participants, as well as precise selection of advertising to reach as many local market participants as possible.

Local markets are limited to local service and have a limited number of market participants, there are direct contracts between customers and suppliers, goods and services tailored to the needs of local market participants, as well as precise selection of advertising to reach as many local market participants as possible.

The importance of territorial zoning lies in the number of market participants who can be involved in trading in the markets. Today, the global nature allows the accumulation of free investment capital at the global level.

The first international exchanges appeared in the 2nd century on the site of organized platforms and were associated with the trade of agricultural assets.

In order to increase the efficiency of the first commodity exchanges, traders began to develop exchange trading rules, which were constantly modified over time.

The history of the development of international exchange activities is associated with Belgian traders and their cities. For the first time in historical works, the name of the owner of the hotel Van de Burse appears. He was the owner of the hotel, who tried to support his business by granting the right to rent his premises to commodity traders. His experience became quite popular and was an example for the construction of separate premises - commodity exchanges.

The first commodity exchange was built in Antwerp in 1556 and is officially considered the first building of a commodity exchange. An interesting fact is that the sign of this exchange is now known all over the world: "This exchange is a meeting place for traders of all nations and languages".

Antwerp is also known worldwide for its diamond exchanges. In 1904, a group of Antwerp brokers founded the diamond exchange .

Starting from the 16th century, a significant number of international exchanges emerged, and the main assets traded were initially agricultural products. Later, as financial assets began to play a significant role, securities trading began on international exchanges. This is how the first stock exchanges emerged. In the 17th century, stock exchanges appeared in many European cities. It was the stock exchanges that became the financial centers of various European countries.

The first stock exchange was built in Amsterdam in 1602. It should be noted that the Amsterdam Stock Exchange is the oldest stock exchange in the world and is still operating today.

The opening of a new stock exchange in the Netherlands provided this country with a central place in the international financial system at that time. At that time, more than 5,000 transactions were concluded on stock exchanges by various participants. An example is the Amsterdam Stock Exchange. The first rules of exchange trading were developed there.

Today, the CME Group Commodity Exchange is known throughout the world, which has a rich history and achievements not only in the USA.

It is no coincidence that the CME Commodity Exchange has become an important center for international pricing for the main types of commodity groups of agricultural assets. History shows that in the 1830s and 1840s, the city of Chicago was the American grain trading center, where many Midwestern trade operations took place.

The industrial revolutions contributed to the development of this market. Farmers brought almost all their grain to Chicago in the hope of selling it at high prices, but this only led to price collapses on the markets. Even in favorable years, high price volatility could be observed.

At the beginning of the nineteenth century, most of the American grain and oilseeds were produced in the inland states of the USA, where there were mainly farmer groups. Most of them were engaged only in agriculture. The sale of agricultural products now provided the main income. Most of these farmers did not have access to large markets and often did not receive a favorable price for their products.

The main trade route to the Atlantic coast was the New Orleans River, and small local grain markets were also built along it and the other rivers of the Ohio and Mississippi, which geographically stretched from East to West. The only logistics available at that time were river and sea transport.

Due to the inability to sell their grain at high prices, farmers were forced to process it into flour or feed and sell it, but this method often did not save them from awkward price fluctuations.

The Great Lakes became the main logistical route for delivering agricultural products to Chicago.

In international activity, the concepts of “organized markets” or “organized trade” are common, which can be replaced by the terms “exchange markets” and “exchange trade”.

Thus, in many classical works on the study of international exchange activity, exchange trade is associated with organized places or organized trade, which is concentrated in large cities - financial or logistical centers of the world.

International exchange activity can be defined as an economic category that involves the creation and maintenance of organizational and legal relations regarding the purchase and sale of exchange assets with the help of professional participants on international commodity and stock exchanges.

The concept of international exchange trade is based on the definition of organized trade in exchange assets.

International exchange markets are highly organized markets for wholesale trade in commodity and financial assets of standardized parameters.

Spot international exchange trading can be considered as an effective tool for forming initial market conditions in commodity and financial markets.

The main feature of international exchange activity is ensuring market conditions for pricing and forecasting market conditions.

International exchange activity allows speculators to obtain and redistribute free investment capital, ensuring the protection of buyers and sellers on international exchanges based on established exchange trading rules.

Exchange trading is already based on significant transformational changes around the world. The existence of historically formed international exchange centers has created additional conditions for the use of innovative tools and innovative technologies for trading in futures contracts - derivatives.

Intensification of international exchange competition in modern conditions has created opportunities for commodity and stock exchanges of the world to become leading financial centers and integrate into intercontinental alliances of electronic exchanges.

International stock exchange activity arose in large centers of trade and financial settlements and became a sign of liquidity in organized trade in goods and financial assets.

Historically, the first international stock exchange activity arose in organized markets for agricultural products. Initially, trading took place in available assets, later trading was carried out mainly in futures and options contracts on the price of commodity and financial assets.

The openness and transparency of international stock exchange trading is the basis for creating conditions for the formation of competitive advantages. Open access of participants in international stock exchange activity to stock quotes led to the expansion of stock exchange trading, covering new countries and continents.

To ensure compliance with the rules of stock exchange trading, the participation of stock intermediaries has been necessary since the beginning of the development of international stock exchange activity.

Exchange trading has undergone a long process of international transformation and can be considered as a component form of organized trade, built on historical rules of trade, social principles and economic relations between market entities.

Exchange trading is possible only in the presence of organized markets for the sale of physical assets, that is, spot markets. The latter markets arose thousands of years ago BC and gradually developed from simple commodity markets to electronic international exchange platforms. International exchange trading is identical to the concept of organized international exchange trading in underlying assets.

International exchange activity, as an organized form of trade, characterizes the degree of development of a market economy. Therefore, the functional tasks and characteristics of modern international exchanges have changed somewhat, in accordance with the new requirements of participants in organized markets and current market conditions for producers and consumers of commodity and financial assets.

Today, an important role is played by the search for new basic needs and requirements among potential participants, taking into account technological changes and the use of artificial intelligence in various industries.

Based on the above, it can be argued that modern international stock exchange activity is organized commodity and financial markets, where the main advantage is on the side of buyers or demand sets the basic rules of the game for all market participants.

If there is an advantage in supply, this means that buyers still have advantages. Consumers and their needs become a priority for both producers in their economic activities and sellers in organized markets.

In such a situation, competition between market participants intensifies, as there is a struggle between buyers and sellers, and there is also a need to conquer new markets and new customers. Modern markets stimulate their participants to search for new opportunities and additional investment resources both domestically and globally.

Modern international stock exchange activity is another form of competitive organized market. Stock trading has become a new driver of competition.