The capital market is the market for securities, where companies and governments can

raise longterm funds. It is a market in which money is lent for periods longer than a year.
[1]
The capital market includes the stock market and the bond market. Financial
regulators, such as the U.S. Securities and Exchange Commission (SEC), oversee the
capital markets in their designated countries to ensure that investors are protected against
fraud.

The capital markets consist of the primary market and the secondary market. The primary
markets are where new stock and bonds issues are sold (underwriting) to investors. The
secondary markets are where existing securities are sold and bought from one investor or
speculator to another, usually on an exchange (e.g. the New York Stock Exchange).

The market where investment funds like bonds, equities and mortgages are traded is known as the
capital market. The primal role of the capital market is to channelize investments from investors
who have surplus funds to the ones who are running a deficit. The capital market offers both long
term and overnight funds. The financial instruments that have short or medium term maturity
periods are dealt in the money market whereas the financial instruments that have long maturity
periods are dealt in the capital market. The different types of financial instruments that are traded
in the capital markets are equity instruments, credit market instruments, insurance instruments,
foreign exchange instruments, hybrid instruments and derivative instruments.

The Indian Capital Market is one of the oldest capital markets in Asia which evolved around 200
years ago.

Chronology of the Indian capital markets

1830s: Trading of corporate shares and stocks in Bank and cotton Presses in Bombay.
1850s: Sharp increase in the capital market brokers owing to the rapid development of
commercial enterprise.
1860-61: Outbreak of the American Civil War and ' Share Mania ' in India.
1894: Formation of the Ahmadabad Shares and Stock Brokers Association .
1908: Formation of the Calcutta Stock Exchange Association.

The pattern of growth in the Indian capital markets in the post independence regime can be
analyzed from the following graphs.
From the above graph we find that the number of stock exchanges in India increased at a crawling
pace till 1980 but witnessed a sharp rise thereafter till 1995.

The following diagram shows the trend in the no. of listed companies participating in the Indian
Capital Market . Here again we register a sharp rise after 1980. the number of stocks issued by
the listed companies also show a similar trend.
Trading Pattern in the Indian Capital Market

There are mainly two types of transactions that are carried out in the Indian Capital Market, one is
the spot delivery transactions and the other is the forward delivery transactions. The role of
the broker in the Indian Capital Market is to facilitate the purchase or sale of securities and earn
commission on each transaction.

National Stock Exchange

To inject an international standard to the Indian Stock Market the National Stock Exchange was
started in 1992 by the Industrial Development Bank of India, Industrial Credit and
Investment Corporation of India, Industrial Finance Corporation in India, all Insurance
Corporations and the selected commercial banks. The trading members and the participants
constitute the players in the national Stock Exchange.

The following are the advantages of the National Stock Exchange over the traditional exchanges:

• The NSE basically integrates the stock market trading network across the nation.
• The investors have the freedom to trade from any part of the nation at the same price.
• Greater operational efficiency and informational efficiency can wipe out the delays in
communication, late payments and the malpractices that are common in the traditional trading
grounds.

 Australian Stock Exchange

 Hong Kong Stock Exchange
 Tokyo Stock Exchange
 American Stock Exchange
 Bombay Stock Exchange
 National Stock Exchange
 London Stock Exchange
 New York Stock Exchange
 Toronto Stock Exchange
 Dhaka Stock Exchange
 Jamaica Stock Exchange
 Karachi Stock Exchange
 Singapore Stock Exchange
 Paris Stock Exchange
 Taiwan Stock Exchange
 Kuwait Stock Exchange
 Nigeria Stock Exchange

  Oslo Stock Exchange

 Saudi Stock Exchange
 Swiss Stock Exchange
 Thailand Stock Exchange
 Colombo Stock Exchange
 Philadelphia Stock Exchange
 Shanghai Stock Exchange
 Berlin Stock Exchange
 Boston Stock Exchange
 Luxembourg Stock Exchange
 Dubai Stock Exchange
 Frankfurt Stock Exchange
 German Stock Exchange
 Mauritius Stock Exchange
 Amman Stock Exchange
 Bahrain Stock Exchange
 Canadian Stock Exchange
The foreign exchange market (currency, forex, or FX) trades currencies. It lets banks
and other institutions easily buy and sell currencies. [1]

The purpose of the foreign exchange market is to help international trade and investment.
A foreign exchange market helps businesses convert one currency to another. For
example, it permits a U.S. business to import European goods and pay Euros, even
though the business's income is in U.S. dollars.

In a typical foreign exchange transaction a party purchases a quantity of one currency by

paying a quantity of another currency. The modern foreign exchange market started
forming during the 1970s when countries gradually switched to floating exchange rates
from the previous exchange rate regime, which remained fixed as per the Bretton Woods
system.

The foreign exchange market is unique because of

• its trading volumes,

• the extreme liquidity of the market,
• its geographical dispersion,
• its long trading hours: 24 hours a day except on weekends (from
22:00 UTC on Sunday until 22:00 UTC Friday),
• the variety of factors that affect exchange rates.
• the low margins of profit compared with other markets of fixed
income (but profits can be high due to very large trading volumes)
• the use of leverage

Main foreign exchange market turnover, 1988 - 2007, measured in billions of USD.

As such, it has been referred to as the market closest to the ideal perfect competition,
notwithstanding market manipulation by central banks. According to the Bank for
International Settlements,[2] average daily turnover in global foreign exchange markets is
estimated at $3.98 trillion. Trading in the world's main financial markets accounted for
$3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market
turnover was broken down as follows:
• $1.005 trillion in spot transactions
• $362 billion in outright forwards
• $1.714 trillion in foreign exchange swaps
• $129 billion estimated gaps in reporting

Most traded currencies[2]

Currency distribution of reported FX market turnover

ISO 4217 code % daily share

Rank Currency
(Symbol) (April 2007)
1  United States dollar USD ($) 86.3%
2  Euro EUR (€) 37.0%
3  Japanese yen JPY (¥) 17.0%
4  Pound sterling GBP (£) 15.0%
5  Swiss franc CHF (Fr) 6.8%
6  Australian dollar AUD ($) 6.7%
7  Canadian dollar CAD ($) 4.2%
8-9  Swedish krona SEK (kr) 2.8%
8-9  Hong Kong dollar HKD ($) 2.8%
10  Norwegian krone NOK (kr) 2.2%
11  New Zealand dollar NZD ($) 1.9%
12  Mexican peso MXN ($) 1.3%
13  Singapore dollar SGD ($) 1.2%
14  South Korean won KRW (₩) 1.1%
Other 14.5%
Total 200%