Introduction to Securities market

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Securities market has developing now days. But to serve needs of trader. In addition traders require markets that are liquid. Because, you need to trade with minimum transaction and delay costs. Therefore, securities market is an exchange to do trade. Check overview on securities market.

Introduction

Securities market help in transfer of funds. Because, it transfer fund with inactive funds to others. So when you have useful need. In addition securities provide part of savings to investments. Moreover, securities are performing on base of demand and supply. Understand basics of securities market.

You will provide timely and correct information. Such as past transactions, liquidity and low transaction costs. But by your capacity you need to invest and save. Therefore you are not forced by individual capacity. However, all financial market consists of investors. Such as buyers and sellers of securities, intermediaries and regulatory bodies.

What is Securities Market

Securities are tool of financial to raise funds. Probably, security market helps in promotion of trade. It increases internal and external trade. However, security market collect large amount of capital by selling. Like stocks and bond.

Securities markets are divided into two categories. Such as primary and secondary market. Therefore, primary market is used for new securities. Moreover, this market used by companies.  So when they have securities to sell for first time. These securities are created in primary market.

Primary Market

Primary market refers to market where new issues arrive.  You have stocks and bonds not sold before can be sold. It is used by issuers for raising fresh capital from investor. To make initial public offers or rights issue. Therefore investment bankers act as under writers. Because to bring new issues to market through primary market.

You can buy securities directly from issuing companies. Therefore selling of stock for first time. But to public is called initial public offering (IPO). This sale is public offering in case of issue new stock. Probably, every dealer earns commission. Due to that it built into price of security offering. You can see in prospectus. Primary market creates long term investment. In addition corporate borrow from capital market.

Since, primary market gives you continuous market. Because you have an option to liquidate your investments. Thus, you can directly contact issuer in primary market. In addition you can raise funds in primary market. Hence, through private placement or public issue. It means Initial Public Offer  (IPO) or Follow on public offer (FPO).

Secondary Market

Secondary market provides liquidity. For those who trade and do settlement on stock exchanges. Therefore, it supports growth of primary market and capital formation. But in secondary market you cannot contact issuer. You can have deal with two investors. On other hand secondary market operates two mediums.

Such as Over The Counter (OTC) market and Exchange Traded Market. OTC markets are informal type of markets. You can trade negotiate. In this type of market securities are traded and settled over counter. Actually, these Indian markets have OTC exchanges like OTCEI.

However, they do not give much volume. Hence secondary markets are also known as aftermarket. For any used good or assets you can refer secondary market. You have other option of trading through stock exchange route. You can do trade and settlement through stock exchanges.

Similarly, you don’t know both buyers and sellers. And as per fixed time settlement of trades done. Therefore, when your trades executed on exchange. It will settle through clearing corporation. And it acts as counterparty and guarantees settlement.

You can have major players in primary market. It consists of merchant bankers, MF, financial & foreign institutional. And Individual investors, issuers companies, bodies corporate, lawyers and DP. These stock exchanges have list of securities.

Money market

Money market is financial instruments with high liquidity. You have chance to buy and sell various short term securities. It means you can borrow and lend money in short term. Therefore, it also trade in highly liquid with maturities less than 90 days. Such as bankers acceptance, certificates of deposit and commercial paper. And government securities, foreign exchange and bullion.

Money markets are largely informal. Therefore, most transactions do over phone, fax or online. Money market provides short term debt financing and investment. It is important for businesses. Because it allow companies with additional cash.  You can look examples of money market.

To invest in short term securities. If your cash shortfall.  You can sell securities or borrow funds on short term. Probably, funds suppliers for money market are institutions and individuals. Government securities are also part of money market. You can check types of money markets. Knowledge of these different market structures helps you to trade.

Finally, there are different types of market structures. Because traders have different needs. It is very important in making transaction cost more profitable. In addition, you need to develop trading strategies. Because, it may not work in all market structures.

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