A capital market is a market where both government and companies raise long term funds to trade securities on the bond and the stock market. It consists of both the primary market where new issues are distributed among investors, and the secondary markets where already existent securities are traded.
In the capital market, mortgages, bonds, equities and other such investment funds are traded. The capital market also facilitates the procedure whereby investors with excess funds can channel them to investors in deficit.
The capital market provides both overnight and long term funds and uses financial instruments with long maturity periods. The following financial instruments are traded in this market:
- Foreign exchange instruments
- Equity instruments
- Insurance instruments
- Credit market instruments
- Derivative instruments
- Hybrid instruments
The following are some of the main capital market regulatory authorities:
- U.S. Securities and Exchange Commission
- Securities and Exchange Board of India
- Australian Securities and Investments Commission
- Authority of Financial Markets (France)
- Canadian Securities Administrators
- Securities and Exchange Surveillance Commission (Japan)
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