Intermediaries and Features of Capital Market

Intermediaries and Features of Capital Market

Tags:      Gig Economy     Economy     WTO     WTO Public Stockholding     MSP     Economic Growth     Masala Bond     Environmental Performance Index     Forecast of Economic Growth     Functions of the Finance Commission

The Capital Market has the following characteristics:

1. Serves as a link between Investment Opportunities and Savers: Because it moves money from savers to borrowers who are looking to start their own businesses, the capital market is an essential link in the saving and investing process.

2. Long-term Funding: It aids investors in making long-term investments with their hard-earned money.

3. Aids in the formation of capital: Investors with excess funds who want to put their money in an investment and take advantage of the power of compounding offer themselves opportunities on the capital market.

4. Facilitates Intermediaries: Intermediaries like brokers, banks, and others are needed to facilitate the transfer of shares and money from one investor to another. thereby assisting them in conducting business.

5. Regulations and Guidelines: The fact that the capital markets are governed by the government makes them a safe place to trade.

An illustration of the capital market would be a company called XYZ, which plans to raise the capital it needs from the public by issuing new securities in the primary market. Subsequent to giving the new protections, individuals who are fascinating in purchasing those offers in the wake of doing research of the organization, purchase those offers through the First sale of stock (Initial public offering) process. The existing buyers and sellers of that security begin trading that security in the secondary market following the initial purchase.

Financial intermediaries are organizations that assist in the transfer or channeling of funds from those with excess funds to those in need. These intermediaries are known as capital market intermediaries. They connect the surplus parties to the deficit parties through a middleman. A classic illustration is a bank that makes loans with deposits it has accumulated. India's main financial intermediaries are the Stock markets that include the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and the Multi Commodity Exchange (MCX). Other examples include banks, insurance companies, pension funds, and mutual funds.