CBS Investment

Exchange crises are a kind of reaction of the securities market on the excessive “swelling” of fictitious capital. One such crisis occurred in October 1987, when stock prices fell sharply on the stock markets of the capitalist countries. Thus, in comparison with the maximum level of August 25,1987, in October 19, 1987, they fell on the New York Stock Exchange at 36%, Tokyo – more than 20%, the Paris and London markets – at 35-40%, while the stock exchanges in Frankfurt-am-Main, Sydney and Hong Kong – even at 45-50%. Thus, the crisis was one of the strongest in the history of stock market crises. It turned out on “classical terms”, i.e. it occurred at the height of the economic recovery and lead to a reduction in fictitious capital, for example of U.S. corporations, at 550 billion dollars.

Questions about what stock exchange is and what features are a part of its notion, of course, is primarily important for the legislation. There is a particular need for a legal definition and differentiation of various trade associations, because the economic importance and the effectiveness of the exchanges are just obvious (it is sufficient to refer to the turnover of the Stock Exchange and compare it with the basic macroeconomic indicators of the economy of the state (e.g., GDP)). It is also apparent that the stock exchange is a subject of managing and leads business activities (stock activities), mediating between buyers and sellers. In this regard, the Exchange has some, but quite specific, rights and responsibilities. The specificity of the rights and obligations is attributable to the same economic isolation and the importance, and consequently to the supervision of the state. Considering all the above, we will try by logical arguing, to define the term ” stock exchange” and point to major differences between the stock exchange and the market.