Role of Exchanges
Exchanges were invented several centuries ago, and their role has not changed much since then. The main functions of an exchange are:
- provision of trading facilities for standardised sale and purchase transactions and
- formation of a fair market price.
Standard procedures for concluding and settling transactions are established by the Rules of the Exchange, which are obligatory for all the market participants. The fairness of the price formation is determined by the supply vs. demand on the exchange and market participants’ equal access to the exchange’s trading data.
In today’s world the exchange’s activity is strictly regulated and controlled by the state because the exchanges are an integrated element of the market economy. The wealth of both investors and whole industries and sometimes economy of the whole country depends on the quality of the exchange’s operation. This explains why all economically active people watch the situation on the market closely, analyzing first of all, exchange quotations and exchange indices.
Role of Broker in Stock Market
An exchange, working within the whole country, cannot conclude service agreements directly with all the players. In order to service hundreds of thousands of exchange players (in some states the number of players reaches millions) the exchange would have to open branch offices in every city and compete in the number of employees with the biggest banks. They use a two-tier model instead: an Exchange works only with professional intermediaries – traders (brokers) who in their turn service the target investors.
Only a professional market participant who has concluded an agreement with the exchange and meets all the requirements defined in the Rules of the Exchange can submit an order to the exchange. The trader’s main business is to execute the orders submitted to the exchange by his/her clients. The quality of the broker’s service depends on how efficiently he/she executes the clients’ orders and also is determined by the level and variety of the offered services.
The main advantage of this two-tier model is providing the competition between the traders who are interested in raising the number of their clients which means they must maintain their services on a proper level.
The level and quality of brokers’ services are also the object of the state’s close attention. Every broker shall have a license to perform brokerage activity, report regularly and meet all the legal requirements which main aim is to provide the target investor with the maximum protection. However, the law does not release investor from the necessity to choose the broker he/she trusts most.
If you have a wish to start trading securities on the Ukrainian Exchange, you should contact the intermediaries – professional market participants possessing the appropriate licenses and registered at the exchange.
What is DMA?
The Internet has influenced many spheres of life, and exchange trading is no exception. At the end of the 1990s Direct Market Access came to prominence. Thanks to this invention, investors got access to exchange trading via brokers while seeing all that is happening on the market and having an opportunity to take decisions at his/her own discretion and instantly concluding trades from their own houses, offices or vacation spots. Theoretically it is possible to trade nowadays from any place of the world, and mobile communications have eliminated the necessity of wires or physical rading venues. In 2009 after the launch of the Ukrainian Exchange, DMA came to Ukraine.
Ukrainian Exchange: easy to access, fast, convenient
Thanks to the advanced exchange technologies, the net cost of exchange transactions significantly reduced, that’s why the brokers now can service even those investors for whom exchange trading used to be unobtainable. The limit of the minimal size of investment has dropped to a few thousand hryvnias.
The speed of transactions depends now only on capacity of your internet channel and your broker’s server.
Having signed an agreement with a broker, you can trade either through him/her by using the same program as professional traders or through the website. Some brokers give an opportunity to trade via a pocket computer or a smart phone.
For all questions regarding access to trading on the Ukrainian Exchange, please contact our Exchange Members.