Introduction: Securities markets play a pivotal role in the global economy, acting as financial marketplaces where buyers and sellers converge to trade various financial instruments. These markets are essential for the efficient allocation of capital, enabling businesses, governments, and individuals to raise funds and manage risks. This article explores the key functions, participants, and mechanisms of securities markets, shedding light on their crucial role in the modern financial system.
What are Securities Markets? A market is where two parties, usually buyers and sellers, can gather to facilitate the exchange of goods and services. Securities markets specifically focus on the buying and selling of financial instruments known as securities. Securities include stocks, bonds, derivatives, and other investment products that represent ownership or a creditor relationship with an entity.
Primary and Secondary Markets: Securities markets can be broadly categorized into primary and secondary markets. In the primary market, newly issued securities are sold for the first time, allowing companies, governments, or other entities to raise capital. The secondary market, on the other hand, facilitates the trading of previously issued securities among investors. This liquidity enables investors to buy and sell securities after their initial issuance.