Capital Markets Overview

Capital markets are the exchange system platform that transfers capital from investors who want to employ their excess capital to businesses that require the capital to finance various projects or investments. It allows businesses to raise long-term funds by providing a market for securities, both through debt and equity. It offers a whole range of sometimes complicated products which allow businesses and banks not just to raise capital but also to hedge (or protect) against risks.

Those who seek capital in this market are businesses, governments, and individuals. They seek to improve transactional efficiencies by bringing suppliers together with those seeking capital and providing a place where they can exchange securities. Capital markets are composed of primary and secondary markets. The most common capital markets are the stock market and the bond market. It is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold,

The U.S. Securities and Exchange Commission (SEC) oversee capital markets to protect investors against fraud, among other duties.