Bilal Basrai worked on Wall Street for many years before making the decision to start his own firm, developing a reputation for excellence in everything that he did along the way. He also gained great experience of working in capital markets during this time. Capital markets are vital to functioning economies, but many do not understand the role they play. The following is a basic rundown of what they are and how they serve the economy.
What Are They?
Capital markets are markets that make the selling and buying of debt instruments and equity possible. They allow for the channeling of savings and investments between the users of capital, such as governments and businesses, and those who provide capital, which is usually investors. Capital is a crucial component of generating increased output, which makes capital markets vital to the development of thriving economies.
Primary and Secondary Markets
Capital markets include both primary and secondary markets. A primary market is one in which new bond issues and stock are sold to investors, allowing for the development of new businesses. Secondary markets deal in the trading of existing securities, often allowing for the continued success of existing businesses.
How Are They Overseen?
Most economies will have financial regulators in place to oversee capital markets. In the United States, this task falls to the Securities and Exchange Commission. Such organizations are responsible for regulating the various capital markets, particularly as most trading is now done through computerized systems. Some of these systems are available to the public, whereas others are much more tightly-regulated.
Bilal Basrai is a financial professional with many years of experience.