3.

1 INDUSTRY PROFILE
A financial market is a market in which people trade financial securities and derivatives
at low transaction costs. Securities include stocks and bonds, and precious metals.

The term "market" is sometimes used for what are more strictly exchanges, organizations
that facilitate the trade in financial securities, e.g., a stock exchange or commodity
exchange. This may be a physical location (such as the NYSE, LSE, JSE, BSE) or an
electronic system (such as NASDAQ). Much trading of stocks takes place on an
exchange; still, corporate actions (merger, spinoff) are outside an exchange, while any
two companies or people, for whatever reason, may agree to sell stock from the one to the
other without using an exchange.

Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade
on a stock exchange, and people are building electronic systems for these as well, to
stock exchanges.

DIFFERENT TYPES OF FINANCIAL MARKETS

Capital Market

Capital Market consists of primary market and secondary market. In primary market
newly issued bonds and stocks are exchanged and in secondary market buying and selling
of already existing bonds and stocks take place. So, the Capital Market can be divided
into Bond Market and Stock Market.

Bond Market provides financing by bond issuance and bond trading.

Stock Market provides financing by shares or stock issuance and by share trading.
As a whole, Capital Market facilitates raising of capital.

Money Market

Money Market facilitates short term debt financing and capital. It is an important part of
the economy which provides short-term fund.The money market is the part of financial
market which deals in the borrowing and leading of short-term loans generally for a
period of less than or equal to 365 days.
 Derivatives market
Derivatives Market provides instruments which help in controlling financial risk.
derivatives market is the financial market for derivatives, financial instruments like futures
contracts or options, which are derived from other forms of assets.
The market can be divided into two, that for exchange-traded derivatives and that for over-the-counter
derivatives. The legal nature of these products is very different, as well as the way they are traded,
though many market participants are active in both.

Foreign Exchange market

Foreign Exchange Market facilitates the foreign exchange trading. Foreign exchange
market (Forex, FX, or currency market) is a global decentralized or over-the-counter
(OTC) market for the trading of currencies. This market determines foreign exchange
rates for every currency. It includes all aspects of buying, selling and exchanging
currencies at current or determined prices. In terms of trading volume, it is by far the
largest market in the world, followed by the Credit market.

Insurance Market
Insurance Market helps in relocation of various risks.

• Commodity Market
Commodity Market organizes trading of commodities