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History of security markets development to date
Introduction
A financial securities market is a marketplace where various securities such as stocks, bonds,
and derivatives are bought and sold by individuals and organisations.
 The definition of a securities market is that it is a financial market in which individuals

and organisations buy and sell securities, such as stocks, bonds, and derivatives.
 Securities markets are divided into two categories – primary and secondary markets.
 They can be organised as exchanges, over-the-counter (OTC) markets, or electronic
platforms.
 Some of the examples of securities markets are the New York Stock Exchange
(NYSE), London Stock Exchange (LSE), and Frankfurt Stock Exchange.
Financial security is a type of financial asset that holds value and can be traded in financial
markets. They are usually issued by governments or companies, and are used to raise capital to
finance operations and growth.
Securities often trade on a secondary market, with buyers and sellers trading securities between
themselves. These transactions involve a variety of laws and regulations designed to protect
investors and ensure fair and transparent trading practices.
Financial securities are subject to market risk, meaning their value can fluctuate quickly and
dramatically in response to changes in the economy, politics, and other factors. As such,
investors who buy securities are exposed to both the potential for gain or loss, depending on the
perform Types of securities
There are two main types of securities: equity and debt.

Equity securities: These represent ownership in a company. When an investor buys equity
securities, they become a shareholder of the company. Shareholders are typically not entitled to
regular payments – although equity securities often pay out dividends. In the meantime, they are
able to profit from capital gains when they sell the securities, assuming they have increased in
value.
Debt securities: These represent a debt obligation, usually issued for a fixed period of time.
When an investor purchases a debt securities, they are lending money to the issuer –
corporations, governments and other entities – in exchange for regular interest payments and a
return of the principal amount at maturity. ance of the asset.
Participants in the securities market are individuals or institutions that play a role in the buying
and selling of securities. These participants can be organised into two categories: primary
market participants, who are responsible for issuing securities, and secondary
market participants, who are responsible for trading securities already issued.
Primary market participants include investment banks, governments, and corporations.
 Investment banks act as intermediaries between issuers and investors. They assess
the underwriting risk of an issuer, and if they decide to take on the risk, they will bring
the issuer to the market and work to secure the necessary funding.
 Governments and corporations can also issue securities directly to the public without an
intermediary.
Secondary market participants include retail investors, institutional investors, and broker-
dealers.
 Retail investors can purchase securities through their retail brokers or directly from the
issuer.
 Institutional investors are large investors such as mutual funds, hedge funds, or pension
funds. They usually purchase large amounts of securities directly from issuers or in the
secondary market.
 Broker-dealers are firms that act as both brokers and dealers. They buy and sell
securities on behalf of their clients, while also trading for their own accounts
Securities Markets and Economic Development
What role can securities markets play in economic development? Like all financial markets they
link "deficit units"-people, enterprises, or governments-which want more funds than they
currently have to "surplus units," which have more funds than they currently need. In more
colorful, if less comprehensive, terms securities markets provide a meeting place for investors
and borrowers who want to invest money in business (real productive assets) and the savers and
lenders who seek financial returns. The users of capital-government and businesses-are the
issuers of securities, whereas the providers of capital are the buyers of securities banks, of
course, provide another meeting place for borrowers and lenders. Historically, in countries that
witnessed the rise of securities markets, a division of labor in finance emerged with banks
dealing in relatively short-term loans and the securities markets providing long-term funds. But
there were many gray areas between and overlaps among the long- and short-term financial
markets. Today the distinctions are even less clear as banks increasingly take long-term
investment positions in nonbank enterprises, and the securities markets "securitize" many types
of short-term loans. Banks and securities markets compete, but they also cooperate with and
complement each other. A well-developed financial system features both banks and securities
markets. The trend of financial history nonetheless seems to favor an increasingly important role
for securities markets and a lesser role for banks. Regional, national, and world financial centers
tend to be characterized more by the presence of developed securities markets than by that of
large banks.
Securities markets have two broad components: primary and secondary markets. The primary
securities market is the new-issue market where securities originate, that is, where bond and
stock issues are born, typically with the assistance of midwives called investment or merchant
bankers. The secondary markets, the banks we read about in the papers everyday and whose
results are regularly reported on radio and television, are the trading markets where stocks,
bonds, and other securities are bought and sold by investors after they are issued
Many people, including some economists, do not think that secondary markets are important in a
fundamental economic sense because they only shuffle assets (or the ownership of assets) from
one owner to another. This view is incorrect for at least two reasons. First, the primary, new-
issue markets would probably not exist or would be much smaller than they are if the secondary
markets did not exist to give liquidity or shifiability to securities after they are first issued. When
I exchange some of my money for a twenty-year bond or 100 shares of common stock, one of the
most important reasons I do so 3 is because if I change my mind tomorrow (or next monthi or
next year), I can sell the stock or bond to someone else in the trading market and turn it back into
money.
Second, secondary trading markets produce an extremely valuable commodity: information.

Information and liquidity are really the products of secondary markets. Although many people
think that there is too much information in our world today, that we are in danger of suffering
from information overload, when it comes to investment decisions there never seems to be
enough information. The social function of secondary securities markets lies in their generation
of tremendous amounts of information on the value of govemment debts, on the value of
corporate bond and stock issues, on the trade-offs between present and future income and
consumption, and on the yields and returns of different investments. All of this information is
extremely important for efficiently allocating the world's capital. Securities markets contribute to
development in that they increase savings and investment flows and make the allocation of these
flows more efficient. In doing so, they reduce the cost of funds to borrowers and investors in real
productive assets while increasing the returns to savers, lenders, and financial investors. They
accomplish this by creating liquidity and generating information, thereby encouraging people to
save and invest more.
References
Sylla, Richard, and George David Smith, 1995. "Information and Capital Market Regulation in
AngloAmerican Finance." In Michael D. Bordo and Richard Sylla, eds., Anglo-American
Financial Systems: Institutions and Markets in the Twentieth Century. Burr Ridge, Ill.: Irwin.
Sylla, Richard, and George David Smith, 1993. "The Transformation of Financial Capitalism:
An Essay on the History of American Capital Markets." Financial Markets, Institutions &
Instruments 2(2):.
P. J. Drake, Money, Finance and Development (Oxford, 1980), pp. 34–6, 192–3, 215.

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1.

History of security markets development to date

 The definition of a securities market is that it is a financial market in which individuals

There are two main types of securities: equity and debt.

Primary market participants include investment banks, governments, and corporations.

Securities Markets and Economic Development

Second, secondary trading markets produce an extremely valuable commodity: information.

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