Financial markets are a marketplace where people and companies can buy and sell assets, including stocks, bonds, and commodities. These markets also provide a means of financing and redistribution of various risks.
A number of countries have embraced deregulation in financial markets. In particular, the United States and Japan have greatly reduced restrictions on capital movements. The Bretton Woods agreement and the General Agreement on Tariffs and Trade have liberalized international trade and capital flows.
These changes have allowed businesses and investors to enter the financial market and raise money. As a result, the financial markets have become highly interconnected. Many countries have 24-hour trading of financial instruments, and technology has changed the structure and operation of these markets.
The financial markets today are comprised of primary, secondary, and capital markets. Some of these markets are well known and internationally recognized, while others are specialized. There are also several types of financial instruments, such as currencies, bonds, and derivatives.
Stocks are the most commonly traded financial instruments. Individuals and corporations buy and sell shares in publicly listed companies. Other investments include money and insurance.
Money markets, meanwhile, provide short-term financing for businesses and individuals. Banks can lend out money and charge interest on the loans. They are also used to purchase bonds, bills, and other debt securities.
Commodities markets are a type of financial market where traders and investors buy and sell natural resources and other raw materials. These markets typically involve futures, which are commodities that are traded at a specified date.