Basics Of The Player In the Financial Market
In the financial market, the funds flow from the surplus units who are called as investors to the deficit units who require funds. However, in many cases, there is no direct link between these groups. The market intermediaries like mutual funds, brokers, finance and leasing companies provide the link between these two groups. Similarly, in trading of digital currencies, the trading platform like there code acts as a link between the buyer and seller. Continue reading to learn all about trading. There is a huge number of participants and player in the financial market. They are grouped as follows:
Players in the market
Corporate or firms- The firms are the net borrowers. They are always in need of funds for varied projects. These firms come up with different kinds of securities so the risk preference of the investors is met. The money that is raised from issuance of securities is then invested in assets such as plant and machinery. Investors who hold the securities get dividends or interest from the money generated by the assets purchased.
Individuals- They are the net savers. The individuals buy the security that is issued by the corporate. They provide funds so that the fund requirement of the corporate are met.
Government- Governments usually borrow funds in order to meet the budget deficit or to control the liquidity. When they require funds for a longer period of time, it is raised through the issuance of government funds and when they are in need of short-term funds (to maintain liquidity), it is raised from the money market. The shares of public sector enterprises are subscribed by the government and they are responsible for making the initial investment. But the shares (investments) are sold to the public through the disinvestment process.
Market intermediaries- In the financial system, there are many market intermediaries operating called as financial intermediaries. They are commonly known as investment bankers or investment managers. The major goal of these financial intermediaries is to ensure smooth working of the investment process and also to establish a bridge between the users of funds and investors. These intermediaries help out the investors in selecting the investment and offer investment consultancy.
Regulators- The financial market is regulated by government agencies. The trading mechanism, overall fund flow, and participant’s relationship are controlled and supervised by the statutory agencies. Apart from this, there are many government and legislative departments which regulate the financial market operations.