Who participates in the market?

In this article, we will provide a general overview of the key players and their respective roles in the capital markets. The capital markets consist of two types of markets: primary and secondary.  This guide will provide an overview of all the major companies and careers across the capital markets.

Primary vs Secondary Markets

In the primary market, there are four key players: corporations, institutions, investment banks, and public accounting firms. Institutions invest capital in corporations that seek to expand and grow their businesses, while corporations issue debt or equity to institutions in return for their capital investment. Investment banks are hired to match institutions and corporations based on their risk profile and investment style.

Finally, public accounting firms are responsible for the preparation, review, and auditing of financial statements, tax work, consulting on accounting systems, M&A, and capital raising. Hence, public accounting firms in the primary market not only assist corporations to raise capital but also help prepare, review, and audit financial statements to ensure a fair representation of their financial performance.

While the issuance of new bonds and new shares in exchange for capital occurs in the primary market, the secondary market is for the sale and trade of previously issued bonds and shares. Buyers and sellers engage in transactions on an exchange, while investment banks facilitate this process by providing equity research coverage. This ability to freely sell and trade securities significantly increases the market’s liquidity.

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