Unit 5 Securities Markets

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Active Vocabulary

I.

stock-exchange (securities market) brokerage concern

	firm
member	corporation
	organization

II.

to buy a "seat" (membership) on the exchange

to trade on the exchange floor

to buy and sell on the exchange

to be listed on the stock-exchange

III.

to handle orders

to execute customers’ orders

IV.

to receive commissions on transactions

to make a market for stocks

to narrow the price changes

to earn ... per cent of total corporate income

V.

securities voting stock

disparity

between supply and demand

liquidity of the market

VI.

specialists	customers
dealers	partners
brokers	holders
principals	officer
members	agents

Ex.1. Read and translate the text 1.

Text 1.The New York’ Stock Exchange

The New York Stock Exchange (NYSE) is almost as old as the country. Established in 1792, it wasn't until 1863 that its name was changed to New York Stock Exchange. The exchange now is a corporation and it has 3,000 members who have bought "seats" (memberships) on the exchange. Only members of the exchange are permitted to trade its "floor". The securities of more than 1900 major companies are "listed" on the NYSE, which means that they have been accepted for trading. Only those securities which have been accepted for listing may be traded on the exchange floor. Trading takes place between the houses of 10:00 a.m. and 4:00 p.m., New York time, Monday through Friday.

A member of the NYSE may be a general partner or holder of voting. stock in one of the brokerage concerns which is known as a member firm or a member corporation. About half the members of the New York .Stock, Exchange are partners or officers in member organization doing business with the public. These members execute customers’ orders to buy and sell on the exchange, and their firms receive negotiated commissions on those transactions.

About one fourth of the members of the NYSE are specialists, so called because they specialize in "making a market" for one or more stocks. The specialists' have two jobs. First, they execute limit orders that other members of the exchange may leave with them. In hand-ling these orders, the specialists act as brokers or agents. The second, more complex role of the specialists is that of dealers or principals for their own accounts. When there is a temporary disparity, for example, between supply and demand, the specialists are expected to buy or sell for their own accounts in order to narrow the price changes between transactions. By doing this the specialists contribute to the liquidity of the market.

To be listed on the New York Stock Exchange a company is expected to meet certain qualifications and to be willing to keep the investing public informed on the progress of its affairs. Particular attention is given to such qualifications as: (1) whether the company is national or local in scope; (2) the company's relative position and standing in the industry; (3) whether or not the company is engaged in an expanding industry, with prospects of at least maintaining its relative position. The NYSE currently lists the common stock of 1900 corporations, but these include most of the larger, nationally known companies. They earn about 90 % of total corporate income.

Ex.2. Explain the meaning of the following words from the text:

broker, dealer, specialist, partner, agent.

Ex.3. Translate these sentences into English using the active vocabulary of the text.

I. Слово биржа латинского происхождения: bursa кошелек, явно что-то связанное с деньгами. 2. Биржа - место, где покупают и продают, заключают сделки и подписывают договора, подбирают клиентов для новых сделок. 3. В самом общем понимании биржа - одна из форм рынка. 4. Основное преимущество Фондовой биржи составляет "ликвидность", т.е. есть возможность быстрого превращения акций в наличные деньги. 5. Обмен ценными бумагами в операционном зале Фондовой биржи позволяет продавцам и покупателям мгновенно находить друг друга. 6. Большинство операций купли-продажи акций совершается в считанные секунды после того, как брокер получит от инвестора указание о покупке или продаже акций. 7. В 1875 году Нью-Йоркакая фондовая биржа утвердила практику использования брокеров-специалистов 8. Специалисты работают в операционном зале в окружении брокеров, которые передают им указания клиентов. 9. Если возникает дисбаланс между спросом и предложением, специалисты обеспечивают нормальное функционирование рынка, предоставляя свой собственный капитал. 10. В США существуют от сотни брокерских фирм-гигантов вроде "Мерил Линч", в которых работают тысячи брокеров, до мелких фирм с двумя тремя брокерами.

Ex. 4. Discuss Text 1 according to the following outline:

1. The NYSE - its foundation and chief task.

2. Members of the NYSE and their functions:

a) brokers

b) specialists

3. The main rules of listing on the NYSE.

Ex.5. Read the dialogue and get ready:

1. To give definitions of the bull and bear markets.

2. Explain a mechanism of investing securities.

3. State the difference between stock and commodity exchanges.