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Welcome to today's session
on capital markets.
The capital market is
a vital component of
the financial system,
serving as the arena where
savings and investments
are channeled between suppliers,
those who have capital,
and those who are
in need of capital,
whether in the United States,
where the term stock market is
commonly used or
the United Kingdom,
with its own set of terminology,
capital markets generally
refer to venues where
long term securities like
equities and bonds
are bought and sold.
Efficient functioning
of these markets
plays a critical role in
supporting business expansion,
economic development, and
wealth creation
across the globe.
Capital markets include
various market types
and structures.
There are direct markets where
buyers and sellers
interact directly,
and intermediary driven markets
divided into broker markets
and dealer markets.
Broker markets use
intermediaries
to facilitate transactions,
while dealer markets involve
dealers who buy and sell
securities themselves.
Capital markets are also
categorized into primary
and secondary markets.
In the primary market, entities
issue new securities
to raise funds.
Once issued, these
securities are
traded among investors
in the secondary market,
providing liquidity
and flexibility
for managing risk and
rebalancing portfolios.
Within the capital market,
the two key instruments
are equities,
commonly known as stocks and
fixed income securities
such as bonds.
Equities grant
shareholders ownership,
potential voting rights, and
