Capital market

Capital market

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A capital market is a market
Market
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...

 for securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...

 (debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...

 or equity
Equity (finance)
In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists...

), where business enterprises (companies
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...

) and government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...

s can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets (e.g., the money market
Money market
The money market is a component of the financial markets for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames. Trading in the money markets involves Treasury bills, commercial paper, bankers' acceptances, certificates of deposit,...

). The capital market includes the stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...

 (equity securities) and the bond market
Bond market
The bond market is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the Secondary market, usually in the form of bonds. The primary goal of the bond market is to provide a mechanism for long term funding of public and...

 (debt). Financial regulators, such as the UK's Financial Services Authority
Financial Services Authority
The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...

 (FSA) or the U.S. Securities and Exchange Commission (SEC), oversee the capital markets in their designated jurisdictions to ensure that investors are protected against fraud, among other duties.

Capital markets may be classified as primary market
Primary market
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process...

s and secondary market
Secondary market
The page applies to the finanical term; For the merchandising concept, see Aftermarket .The secondary market, also called aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold....

s. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting
Underwriting
Underwriting refers to the process that a large financial service provider uses to assess the eligibility of a customer to receive their products . The name derives from the Lloyd's of London insurance market...

. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the-counter
Over-the-counter (finance)
Within the derivatives markets, many products are traded through exchanges. An exchange has the benefit of facilitating liquidity and also mitigates all credit risk concerning the default of a member of the exchange. Products traded on the exchange must be well standardised to transparent trading....

, or elsewhere.

Regulatory authorities

See main article List of financial regulatory authorities by country
  • Australian Securities and Investments Commission
    Australian Securities and Investments Commission
    The Australian Securities & Investments Commission is an independent Australian government body that acts as Australia's corporate regulator...

    , (Australia);
  • Comissão de Valores Mobiliários, (Brazil)
  • Canadian Securities Administrators
    Canadian Securities Administrators
    The Canadian Securities Administrators is an association of provincial and territorial securities regulators in Canada.-List of securities regulators:* BC: British Columbia Securities Commission*: jointly regulates the TSX Venture Exchange...

    , (Canada);
  • China Securities Regulatory Commission
    China Securities Regulatory Commission
    The China Securities Regulatory Commission is an institution of the State Council of the People's Republic of China , with ministry-level rank...

     , (China);
  • Cyprus Securities and Exchange Commission
    Cyprus Securities and Exchange Commission
    The Cyprus Securities and Exchange Commission , better known as CySEC, is the financial regulatory agency of the Republic of Cyprus.Since Cyprus became a member of the European Union in 2004, CySEC has become part of European MiFID regulation, giving firms registered in Cyprus access to all...

     , (Cyprus);
  • Autorité des marchés financiers (France);
  • Federal Financial Supervisory Authority, (Germany);
  • Securities and Futures Commission, (Hong Kong
    Hong Kong
    Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...

    );
  • Securities and Exchange Board of India
    Securities and Exchange Board of India
    The Securities and Exchange Board of India is the regulator for the securities market in India.-History:It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament...

    , (India
    India
    India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...

    );
  • Commissione Nazionale per le Società e la Borsa
    Commissione Nazionale per le Società e la Borsa
    Commissione Nazionale per le Società e la Borsa or Italian Securities and Exchange Commission is the government authority of Italy responsible for regulating the Italian securities market...

     (Consob), (Italy) ;
  • Komisja Nadzoru Finansowego, (Poland
    Poland
    Poland , officially the Republic of Poland , is a country in Central Europe bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian exclave, to the north...

    );
  • Financial Services Authority
    Financial Services Authority
    The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...

     , (United Kingdom);
  • Dubai International Financial Centre, (United Arab Emirates);
  • Securities and Exchange Commission, (United States of America);


See also

  • Center for Audit Quality
    Center for Audit Quality
    The Center for Audit Quality is an autonomous public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets...

     (CAQ)
  • Committee on Capital Markets Regulation
    Committee on Capital Markets Regulation
    The Committee on Capital Markets Regulation is an independent and nonpartisan 501 research organization dedicated to improving the regulation of U.S. capital markets.-Background:...

     (United States)
  • Financial market
    Financial market
    In economics, a financial market is a mechanism that allows people and entities to buy and sell financial securities , commodities , and other fungible items of value at low transaction costs and at prices that reflect supply and demand.Both general markets and...

  • Financial regulation
    Financial regulation
    Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system...

  • Securities law
    Financial regulation
    Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system...

  • Stock exchange
    Stock exchange
    A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...