involves shareholders who pay the amount for primary issue is received by companies and its major product is IPO. Old and outstanding claims are part of secondary market where when once a company gets the security listed, the security becomes available to be traded over the exchange between the investors. In Primary market transactions one party is deficit and another is a surplus where as in secondary market both the parties are surplus. Delivery of financial claims: includes on the spot delivery and future delivery. On the spot delivery is an instrument for cash market where transactions are settled in real-time and it requires the total amount of investment to be paid by the investors either through their funds or through borrowed capital. Future delivery is an instrument for future market where the settlement or delivery of security or commodity takes place at a future date.
Structure of market: includes formal and informal claims. Formal claims are instruments for Exchange Traded Market is a centralized market, that works on pre-established and consistent procedures. In this market, the buyer and seller don’t know each other and transactions are made with the help of intermediaries, who ensure the payment of the transactions between buyers and sellers. Informal claims are instruments for OTC market which is decentralized allowing customers to trade in customized products based on the requirement and buyers and sellers interact with each other.
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