Comparison Between Financial Markets.pptx

MONEY MARKET VS CAPITAL MARKET

1. Comparison between financial markets

2. OUTLINE MONEY MARKET VS CAPITAL MARKET ORGANIZED MARKET VS OTC PRIMARY VS SECONDARY MARKET PURE AUCTION VS DEALER MARKET CALL VS CONTINUOUS MARKET

3. capital market Money market V s

4. MONEY MARKET The money market is the trade in short-term debt. It is a constant flow of cash between governments, corporations, banks, and financial institutions, borrowing and lending for a term as short as overnight and no longer than a year.

5. good place for individuals, banks, other companies, and governments to park cash for a short period of time, usually one year or less. maintain appropriate level of liquidity on a daily basis. MONEY MARKET

6. CAPITAL MARKET: encompasses the trade in both stocks and bonds. These are long-term assets bought by financial institutions, professional brokers, and individual investors. Have more than 1 year and beyond.

7. Over the counter market Organized market V s

8. OVER THE COUNTER MARKET ORGANIZED MARKET (EXCHANGE) OTC or over the counter is the method of trading for the companies that are not listed formally. Exchange is the method of trading commodities and derivatives for the well-established companies in an organized manner. DIFINITION OPERATED BY Securities that are traded over the counter are traded through the dealer. The exchange is the centralized system of trading with a well-organized network of people to ensure fair trading.

9. OVER THE COUNTER MARKET ORGANIZED MARKET (EXCHANGE) OTC is the decentralized and informal setting for trading which is usually used by small companies and businessmen. Exchange is an absolute formal setting of trading done by well-established companies to keep constant supervision on the action. FORMALITY STATUS WORK HOURS It can be operated at any time because it is done through the dealer. This works according to the exchange timings and not the entire day because it is the intricate network.

10. OVER THE COUNTER MARKET ORGANIZED MARKET (EXCHANGE) DEFIEND LOCATION For trading through OTC one can make use of phones and laptops and can connect from anyplace. Exchange is the formal setting that has a physical location to be operated from

11. Primary market V s secondary market

12. PRIMARY MARKET When a company publicly sells new stocks and bonds for the first time, it does so in the primary capital market.  also called the new issues market. The new issue takes the form of an initial public offering (IPO). All issues are subject to strict regulation.

13. SECONDARY MARKET where securities are traded after the company has sold its offering on the primary market.  also called the stock market. New York Stock Exchange (NYSE), London Stock Exchange, and Nasdaq.

14. SECONDARY MARKET Unlike the primary market, where prices are set before an IPO takes place, prices on the secondary market fluctuate with demand. 

15. Pure Auction market V s Dealer market

16. PURE AUCTION MARKET DEALER MARKET A financial market mechanism wherein multiple dealers post prices at which they will buy or sell a specific security of instrument. A market in which buyers enter competitive bids and sellers enter competitive offers at the same time.

17. PURE AUCTION MARKET DEALER MARKET In a dealer market, a dealer – who is designated as a “market maker” – provides liquidity and transparency by electronically displaying the prices at which it is willing to make a market in a security, indicating both the price at which it will buy the security (the “bid” price) and the price at which it will sell the security (the “offer” price). On an auction market, the current price for a share in a security is the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. Matching bids and offers are then paired together and the orders are executed.

18. PURE AUCTION MARKET DEALER MARKET The government securities market and all OTC markets are dealer market. Dealer market are Quote driven. All future markets are auction market. Auction market are Order-driven.

19. Call market V s Continuous market

20. a marketplace in which trading takes place at certain points in time (discrete time intervals), i.e., when the market is called. For example, call markets are usually called once or twice during the trading day. Buy and sell orders are batched at discrete points during the day and are matched or executed simultaneously at the same price and according to specific rules during each call session. CALL MARKET

21. CALL MARKET Trading in a call market can usually take place either by written auction or by verbal auction. call markets are associated with a greater price uncertainty for market orders than continuous markets.

22. CONTINUOUS MARKET A continuous market is where trading takes place on an ongoing basis. For example, a market order placed in a continuous market will be executed without delay at the best price available.

23. In call markets, traders can place both limit and market orders. price change in a continuous market is likely to be smaller than price movement between calls in a call market, from order placement until execution. CONTINUOUS MARKET

24. Most markets that we see today including the stock exchanges, derivatives exchanges, and forex market are continuous trading markets. Most continuous markets typically start their trading session with a call market auction, so many trades are executed when the market opens based on the initial auction and then the market continues to be open for trading. Some markets also close with a call market auction. CONTINUOUS MARKET

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