Definition of capital market

The capital market, also called Stock market, it's a type of financial market through which funds or means of payment are offered and demanded financing medium and long term.

Market that captures the savings of individuals or entities and uses them to finance the projects of others

The main purpose of this type of market is to act as an intermediary, channeling resources new and investor savings, so that issuers can then carry out financing and investment operations in their companies.

This type of market is used as a means to channel the savings of individuals and entities, for later, Those resources received will be used to finance different projects that other people have or entities.

On the other hand, the capital market is used to transfer resources from sectors that are not very productive to others that are much more productive.

Currently these markets are managed and executed through electronic platforms that are easy to access from various entities, and even access is possible for the general public, not only for experts and actors of this market.

Actors involved in this market

Different institutions participate in the capital market. Finance system, which act as regulators and also complement the operations carried out within the market, the most important being: the stock Exchange(They provide the operability demanded by financial operations from the supervision and registration carried out by the movements of the bidders and demanders and also provide qualified information regarding quotes and the financial and economic situation of the Business), issuing entities (These are institutions that place shares with the mission of obtaining resources from investors; may be public limited companies, the government, credit institutions or entities dependent on the state but decentralized), brokers or brokerage houses (They deal with the purchase and sale of shares and the administration of the investment of third parties) and investors (It can be individuals, foreign investors, institutional investors, among others).

We must emphasize that the stock exchange is a private entity that offers a safe and legal context for carrying out financial activities, basically because it is regulated by the commercial law and the state.

Classes of capital markets

There are different types of capital markets depending on: what is traded in them (stock markets: equity instruments and fixed income instruments and the long-term credit market: loans and credits banking); structure (organized and unorganized markets); and of assets (primary market: the asset is issued only once and is interchangeable between issuer and buyer and secondary market: assets are exchanged between different buyers, to give them liquidity and give them a value).

Regulation

The state, throughout the world, aims to regulate these markets through various measures such as the establishment of tax or limits on the volumes that are traded, the mission is to regulate the inflow and outflow in the capital account of a country.

And this measure is usually accompanied by exchange controls that attempt to restrict the freedom to acquire and sell foreign currency at the exchange rate set by the market.

Now, it is worth noting that to apply these measures it is essential analyze the situation and the context of the nation since in some cases they can be counterproductive to the desired effects.

Electronic and physical operation in the great capitals of the world

The benefits of new technologies allow the realization of this activity online, without the need to be on site, however, there is a long history of work of this type of markets that is centralized in the main financial centers of the world, such is the case of London, New York, through the famous Wall Street that so much fabric to cutting has given even in the seventh art that it finds it a super attractive square to be the setting for many films of great notoriety, and in the eastern world the powerful Hong Kong.

On the opposite side are the money markets, which are those that offer and demand short-term funds.

Capital Markets Topics