Securities Market
Securities Market
What is a Securities Market?
Securities Market is the market in which securities are bought and sold. However, this is not related to a physical location. The term, securities market loosely stands for the entire system n which financial securities or financial instruments are traded, including the people and institutions involved in these transactions, the organizations issuing or intending to issue the securities and the systems that enable the trading processes. In short, it implies the entire infrastructure required for transacting in securities, including the set of regulatory bodies to ensure that the transactions are carried out in a fair and transaparent manner.
At the center of the securities market lies the world "security." One definition of security stands for an investment instrument issued by a government or a company indicating the evidence of either ownership (shares) or creditorship (bonds, debentures). The most important feature of a security is that it can be traded so that its ownership can be transferred from one party to another. Thus, if the ownership cannot be transferred, it will not qualitfy as a security. A life insurance policy for example, or a bank loan taken by an individual would not qualify as a security. The definition of securities also extends to other forms of financial instruments, such as futures, options, etc.
Although a securities market cannot be identified with a physical location it can be logically be divided into two categories, capital market and money market depending upon whether the instruments being traded are long-term or short-term in nature. Capital market refers to a market for long-term financial instruments of ownerships (such as shares) and creditorship (such as bonds and debentures). The money market on the other hand, deals with short-term financial instruments, typically those having a maturity of less than one year.