The capital market consists of a credit market (credit system) and a securities market. The latter is additionally divided into three parts:
primary - purchase of securities by the first buyer;
exchange (secondary) - operations on exchange trading floors;
over-the-counter - secondary market without registering transactions on the stock exchange. Operations on it are carried out through direct interaction between the parties to the transaction and the agreement of the terms of purchase and sale in electronic form or through a telephone conversation. As a rule, new, unknown and small enterprises use this method.
There is another variant of the structure - extended. According to him, the capital market additionally includes the foreign exchange market, the market for derivatives and insurance services. They often carry out short-term transactions (up to one year), so they are not always included in the general structure. Although short-term transactions are also often found in the credit market.
Capital market participants:
primary investor - a person who owns any independent financial resources;
intermediary - a credit and financial institution that accumulates money capital and turns it into loan capital. After that, for a certain period, the organization transfers it to the borrowers on a repayable basis and at a designated percentage. Usually the bank acts as an intermediary;
borrower - a person who receives funds for use and undertakes to return them in due time and pay the loan interest.
The capital market consists of a securities market and a debt market for more than 1 year. The equilibrium point is reached when the supply of deposits equals the demand for loans.
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