Key Players One Should Know In the Financial Market

Key Players One Should Know In the Financial Market

In financial markets, there are many players who take up different types of roles. They would be investors, intermediaries, issuers, etc.  All these players are important in the financial market as it makes the market function properly. Without a single entity, the market will collapse. Before you enter the market you need to know about the important layers of the financial market. However, except in case of cryptocurrency market, the players are quite different from others.  The intermediaries in their market are trading software like bitcoin trader which helps the traders to place the trade.  You can learn more about it here.

Below are mentioned are few of the key players one can find in the financial market.

Issuers- Markets helps in bringing together the sellers and buyers either through the intermediaries or directly.  The seller is known as the issuer. The price at which the asset is sold is known as issue price. There are two different categories of issuers in the market: corporate and government. Municipal bodies and government require money to spend on various things like defense, roads, health, etc and at times they face a deficit in funds. Borrowing money is the only option for governments.  Hence, they issue bonds.  Corporate sell three types of propositions to solve their fund deficit:

  • Long-term debt which is above 1 year
  • Short-term which is below 1 year
  • Equity

Investors –Investors are the people who lend money to the market. They can be of two types: institutional investors and retail investors.

  • Institutional investors- They are an entity, insurance corporations, mutual fund, brokerage, company or any other group which got a huge amount of money to invest.
  • Retail investors- They are the individuals who will participate in the market through their personal account.

Intermediaries- These are the individuals or institutions that facilitate the fund’s transfer between the surpluses to the deficit agents and often act as the middlemen.  They can be banks, brokers, mutual fund firms, dealers, investment banks, underwriting firms, market makers, stock exchanges, depositories, etc.

There are more players who support the proper functioning of the market. For instance, there are rating agencies which rate the capability of the company or a person to pay back the loan taken. They are professional independent firms which take up in-depth analysis and research on the organizations and the securities issued.   The ratings given by these agencies are important as it affects the risk element of the money lending.