What are Financial Markets?

‘Financial markets’ is a collective term used to describe places where market participants (such as institutions, banks and retail traders) come together.

This is where buyers and sellers of financial instruments transact with each other by ‘matching up’ in terms of the financial instrument, its price and trade size under rules set by owners/users of each specific marketplace. Some of these financial marketplaces may be in physical locations, such as the New York Stock Exchange (NYSE) or the London Stock Exchange (LSE). Others may be purely electronic (like the NASDAQ Stock Exchange). Exchanges such as the LSE, NASDAQ and NYSE are highly regulated marketplaces with strict rules.

This helps curb fraudulent and illegal activities, while also creating a highly efficient environment for traders to exchange various forms of financial asset, such as stocks, indices, commodities, bonds or currency futures. Some financial instruments, such as FOREX and, most recently cryptocurrencies, trade via unregulated and decentralised networks.

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