WHAT ARE THE CHARACTERISTICS OF A WELL FUNCTIONING SECURITIES MARKET

Securities market can be explained as a part of the bigger financial market. In this kind of market securities transactions can be done if the supply meets the demands. This is subjective to the economy and also can be traded via Infinity App or other automated software.

Securities market is not a single entity but includes other entities. Some of these entities may be as follows:

  • Equity market
  • Bond market
  • Derivative market-

Components of securities market:

Securities can be divided into two main components, they are:

Primary Market

In this market new securities are issued. And so the primary market is also known as ‘New Issues Markets’ or NIM. In this companies including government as well as public sector can gain funds when these new securities are issued and sold. The typical characteristics of a primary market are as follows:

  • This is a typical market for equity capital on long term basis.
  • The securities are issued from the companies and received directly by investors. There is no middle person or other links involved.
  • The issues are used to gain funds which the company uses most commonly for setting up of a new business, or modernization of an existing business. It may also be used to accumulate funds to repay a loan the company was unable to pay off on its own.
  • It performs the main function of arranging for capital in the economy.
  • The borrowers of the primary market basically raise the capital for a private company to go public.

Secondary Market

In this market, new securities are not issued but existing securities can be sold and bought. The security market can be further divided into organised exchanges. These organised exchanges include stock exchanges as well as over-the-counter. In over the counter exchanges individuals can club together and conduct transactions directly.

‘Secondary market’ is a term also used for other uses of any existing goods or when attempting to conduct a transaction of any used goods.

Characteristics of securities market

Securities market is typically a system that is intertwined between professional as well as non-professional participants. Some of its salient features are as below:

  • It aims to get new capital by issuing new securities which is known as securitization of debt.
  • It liquefies assets into real cash or financial assets.
  • To help get profits in both forms of investment short term as well as long term.
  • To gain profits from operating trades in the market
  • Determining the prices, through the supply and demand and other continuous changes.