FINANCIAL MARKETS

Financial Market refers to a market place, where creation of

trading of financial assets, such as shares, debentures, bonds,
derivatives, currencies, etc. takes place
 FUNCTIONS OF FINANCIAL MARKET
(OR WHY DOES IT EXIST?)

 Mobilization of savings
 Determining the price of securities
 Provides liquidity to tradable assets
 Saves the time, money and efforts of the parties
 MONEY MARKET

Money Market can be understood as the market for short

term funds. Wherein lending and borrowing funds varies from
overnight to a year. It is regulated by Reserve Bank of India,
i.e. RBI
 FUNCTIONS OF MONEY MARKET

 Financing Trade
 Financing Industry
 Profitable Investment
 Self Sufficiency of commercial bank
 FOREIGN EXCHANGE MARKET
(FOREX MARKET)

Foreign Exchange Market is the model where the buyers

and sellers are involved in the buying and selling of
foreign currencies. It is commonly known as FOREX
Market. It is regulated by RBI through The Foreign
Exchange Management Act, 1999 or FEMA.
 FUNCTIONS OF FOREX MARKET

 Currency Conversion
 Transfer Function
 Credit Function
 Hedging Function
GOVERNMENT SECURITIES MARKET
(G. SEC. MARKET)

Government Securities is a market where buying and selling of

government securities takes place.
Securities are treasury bills, bonds, notes.
It is also known as gift edged market.
It is regulated by RBI
 FUNCTIONS OF G. SEC. MARKET

 Generates revenue
 Avoid hike in taxes
 To reduce inflation or recession
 PRIMARY MARKET AND SECONDARY MARKET

Primary Market Secondary Market

•New issue of securities •Securities they already

•It is also called as New own
Issue Market. •It is also called as After
market.
 CORPORATE DEBT MARKET

Corporate Debt Market is a market where bonds issued by

companies are traded. It is regulated by SEBI
 FUNCTIONS OF CORPORATE DEBT MARKET

 Diversification or expansion
 Mergers and Acquisitions
 Day to Day Operations
 Aids in economic growth by providing long – term capital
 Reduces the cost of raising capital
 CAPITAL MARKET

Capital Market can be understood as the market for long term

funds, i.e. duration of above one year. It is regulated by SEBI
 FUNCTIONS OF CAPITAL MARKET

 Mobilization of savings
 Capital Formation
 Provision of Investment Avnue
 Speed up economic growth and development
 Service Provision
 Proper regulation of funds
 Continuous Availability of funds
 DERIVATIVES MARKET

Derivative is a financial contract whose value is derived

from or depends on the price of some underlying asset.
Market where such derivatives are traded is called
Derivatives Market. It is regulated by both RBI and SEBI
 FUNCTIONS OF DERIVATIVES MARKET

 Risk Management
 Price Discovery
 Operational advantages
 Market efficiency
 INTERNATIONAL CAPITAL MARKET

International Capital Market is a network of individuals,

companies, financial institutions, and governments that
invest and borrow across national boundaries. It is
regulated by ICMA - International Capital Market
Association
 FUNCTIONS OF INTERNATIONAL CAPITAL MARKET

 Expanding the Money Supply for borrows

 Reducing the cost of borrowings
 Reducing risk for lenders
Thankyou