Financial market
Financial markets connect issuers, investors, intermediaries and other participants. They include primary issuance and secondary trading, money and capital markets, and markets for instruments such as bonds, shares, currencies and derivatives. The organisation, trading venue, settlement arrangements and regulation vary. Markets can support liquidity, price discovery and allocation of funds, but liquidity can weaken and prices can change sharply. A secondary purchase of an existing security normally pays the seller rather than raising new funds for the issuer.
Worked example
A company issues new bonds to investors in a primary market. An investor later sells one of those bonds in a secondary market; the subsequent sale transfers the claim but does not by itself raise additional cash for the company.
Common mistake
Assuming all market transactions raise new finance for issuers or that a tradable instrument can always be sold immediately at its quoted price.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Supporting | September 2026–June 2027 |
| ACCA | FM | Direct | September 2026–June 2027 |