Market types I

Normally, when we think of the concept "market" we usually make a generalization of what actually encompasses. The truth is that in the financial world, there are different types of market, and has different definitions. 

Do you want to know all types of markets? Read on to find out!

Índice

Market types

Stock Market

He stock market is he set of all institutions, companies and people that involved in financial product transactions in all stock markets in the world. 

He stock market is perfectly centralized and regulated and it is formed by

  • Stock Exchange: It's about a institutionalized and regulated capital market where all operations of buying and selling shares are carried out. 
  • stock brokers: they are also known as Brokers. They are physical or legal persons who carry out purchase and sale of Stock Market securities in favor of third parties. 
  • emitters: is about companies that offer the stock market the representative shares of their company or securities in the form of credit (obligations).
  • investors: It is a natural or legal person offering their own resources financial for future benefits.
  • regulatory institutions: are those Institutions that monitor that the stock market works correctly. For example, in Spain the institution that regulates the stock market is the National Stock Market Commission (CNMV) and the Bank of Spain. 

capital market

It's about a type of financial market where the purchase and sale of titles, financial assets, shares and obligations takes place. 

the capital market gives investors the opportunity to participate as partners in the capital invested by a company in question. In the same way, companies have the opportunity to Place certain capital among investors in order to obtain financing for the expansion of the company. 

we can mention various characteristics of the capital market

  • When an investor buys shares of a company, he directly becomes a partner for a proportional part equivalent to the capital it owns. 
  • Buy and sell securities in the capital market too easy due to the large amount of liquidity that exists.
  • Investing in these types of securities is very risky. since its performance is highly variable. The prices of these titles are very volatile. 
  • No one guarantees that benefits will be obtained from the purchase of titles nor is there a period in which the purchase or sale of titles is required, each one is free to do so when it suits them best. 
financing beyond banking

fixed income market

The fixed income market is the set of markets in which the trading of financial assets is carried out issued by the States, private companies or the public organisms

The objective of fixed income markets is to promote investment and financing by the State, private or public companies through investors who venture to carry out operations with adequate risk, liquidity and profitability for both parties. 

In the fixed income markets, two types of assets: bonds (which have an average maturity of between 2 and 7 years) and the obligations (with an average term of 7 years). 

The only difference between them is the expiration period, but otherwise share the same characteristics: 

  • They are issued by public or private organizations
  • There are cases where can be issued permanently, so there would be no expiration date
  • The interest rate attributed to these assets can be fixed or variable.. It will always be known in advance and is reviewed periodically
  • They are issued on the primary market but are traded on the secondary market
  • The investors have the right to collect the capital they have lent and the interest that has been agreed.

black market

The black market or clandestine market refers to the illegal market for buying and selling items of different types. Within the black market we can observe two types:

  • Buying and selling legal items without collecting or declaring the corresponding taxes, for example, those jobs in which VAT is not declared
  • Buying and selling items whose marketing is illegal (drugs, weapons…)

When going through periods of crisis or product shortages, this type of market tends to intensify. But it does not always happen in these cases, since within a perfectly healthy economy and in periods of prosperity These types of markets are present in the same way. 

Conclusion

These are just some examples of the types of markets that we can find in the mercantile world. Many of them are well known or easy to define, but surely by reading this article we have managed to teach you something new about the world of the market. 

Soon you will discover a second part of this article where you will be able to know the rest of the types of market that exist in the financial world. 

We are waiting for you in the next article!

Leave a Comment

English (UK)