Capital Market

A capital market is a market where securities are traded. In this market both Government and companies raise funds for the long term. The capital market consists of both the primary and the secondary markets. The distribution of new issues among investors take place in the primary market. On the other hand, existent securities are traded in the secondary market. The capital market takes into its expanse the bond market and the stock market.

In the capital market mortgages, bonds, equities and other such investment funds are traded. The investors who are in possession of excess and surplus funds channelize these excess funds to those investors who have run into deficit and the capital market facilitates this procedure.

The funds provided by the capital market are both overnight and long term. The financial instruments used in this market have long maturity periods. The following financial instruments are dealt with in this market.

• Foreign exchange instruments
• Equity instruments
• Insurance instruments
• Credit market instruments
• Derivative instruments
• Hybrid instruments  

The following are some of the main capital market regulatory authorities:

• U.S. Securities and Exchange Commission
• Securities and Exchange Board of India
• Australian Securities and Investments Commission
• Authority of Financial Markets (France)
• Canadian Securities Administrators
• Securities and Exchange Surveillance Commission (Japan)

The stock market forms a major portion of the capital market.