From this discussion it is clear that by differentiating the functions of the financial markets, it is important to mention both, diverse financial institutions that operate in such markets as well as the diverse ways in which these souks are structured. This is referring to the financial institutions otherwise referred to as the major players in the financial markets. This paper highlights that brokers are often considered as commissioned mediators of a buyer or seller who aids transaction by identifying a seller or buyer to achieve the desired transaction. A broker does not have a say in the assets she or he just trades. In other words, the broker does not reserve records in these assets. The benefits or wages of brokers are established by the commissions that they charge to consumers of their services such as the sellers, the buyers, or sometimes both. For instance, brokers include stockbrokers and real estate brokers. The next institution is the dealers. Like brokers, they facilitate business by matching purchasers with assets from sellers; they do not connect in asset conversion. Unlike brokers, however, dealers can maintain records of the assets that they have traded such bought or sold. Such activities often allow them to, the dealer to vend out of the catalogue rather than constantly having to identify sellers to match each tender to purchase. The difference between the price a dealer provides to sell and the price at which he offers to purchase a product is referred to as bid price. Examples of dealers include car dealers, dealers’ of government bonds, and stock dealers.
The investment bankers. The third institution which is involved in the financial markets affairs are the investment Banks. It facilitates the first offer of newly issued securities
The essay is developed from the Financial Markets Theory that avails classical asset pricing hypothesis, a hypothesis composed of objectives such as portfolio choices, basic asset pricing theorem, risk management, portfolio limit, information in financial markets and no risk neutral assessment…
can be supposed to be the attributing factors towards the development of financial innovation. Innovations are mainly done to achieve the basic objectives of financial systems like facilitating the required payment instruments, increased savings, reduction in costs, etc.
The worst thing, he says is that he cannot benefit from them to lower his monthly payments. Several years have passed after home price fell, his Long Island asset loan is too big relative to the value of the house. In this sense, the condition that Mr. Lieb is experiencing is a small-scale illustration of the forces placing much pressure on the financial markets and the economy.
They channel the funds from firms, households and the governments which they have surplus funds to those who have shortage of funds as they spend more than their level of income. Primarily governments, corporations, households, foreigners have excess funds with them and hence they lend them.
With a more or less similar objective of regulating the investment services across all member states of the European Union, Markets in Financial Instruments Directive (MiFID) has been introduced. While replacing the Investment Services Directive (ISD), MiFID proposes to achieve the objectives of protecting the investors in the EU as well as responding to changes and innovations in the securities market.
This paper will define what financial markets and institutions are and their implication in an economy particularly in a largely consolidating world market.
Financial markets "consist of agents, brokers, institutions, and intermediaries transacting purchases and sales of securities." The individuals and institutions operating in the financial markets are linked by contracts and communications networks that form an externally visible financial structure, laws, and friendships.
The rest of the paper is organised as follows: in section a discussion of financial liberalisation including its history and goals is provided; section 3 provides a discussion of the reasons why financial liberalisation continue to lead to financial crisis; section 4 provides possible explanations for the credit crunch in the United Kingdom and the United States of America; and section 5 provides some conclusions and recommendations.
The author states that most governments and other corporate entities usually borrow from the market in form of bonds listed on the capital markets and they have a big effect on the mortgage interest rates. Commodities are also traded in the commodities future markets e.g. crude oil, copper and other minerals.