Basics Of Capital Market

The capital market is the marketplace for long and medium-term financial instruments and securities. It is the market wherein financial securities such as stocks, bonds, etc are sold and bought. Both the institutions and individuals are the participants in the capital market. Surplus funds get channelized to government and financial institutions. The capital market helps in putting this money into productive use. It contributes a great deal to the growth and development of the country’s economy.  The currency market is the largest traded market among the lot. Now the virtual currencies are also gaining quite a popularity. Check out the benefits of trading here. Below mentioned are the important features of the capital market.

Features of the market

Connects the entrepreneurial borrowers and the savers – The capital market is the connecting link between people who save funds and with those who are in need of funds.  It routes the funds from the savers to the borrowers.

Presence of intermediaries- There are various intermediaries which help in smooth functioning of the capital market such as merchant bankers, underwriters, sub-brokers, collection bankers, etc. They are the intermediaries which are the important elements of the capital market.

Deals in medium and long-term investments- the Capital market is basically the market for long and medium-term financial instruments. It helps in borrowing or raising long-term funds. The industrial organizations, corporate, financial institutions, etc get access to funds from both foreign and domestic market through this market.

Regulated by the government rules and regulations- The capital market works freely. But it gets regulated by the government policies, rules, and regulations.

Variety of investors- The capital market consists of a different variety of investors.  The market comprises of both such as institutional investors and individuals.

Deals with non-marketable and the marketable securities- Capital market trades with both non-marketable and marketable securities. The marketable securities are those securities which could be transferred like debentures, shares, etc. And on the other hand, the non-marketable securities are the securities that cannot be transferred like loans and advances, term deposits, etc.

Provides liquidity- The capital market instruments are very much liquid. The investors can sell the securities whenever they require cash.

Over- the counter market- Over the counter markets means the financial instruments such as stocks and currencies gets traded directly between the buyer and seller.

Foreign investors- The foreign investors both institutions and individuals and the non-residents can invest in the securities market. There is no restriction on the entry.