The financial markets can broadly be divided into money market and capital market.
Money market is a market for debt securities that matures in the short term (usually less than one year). Example:-the market for 90-days treasury bills.
This market covers the trading and issuance of short-term non-equity debt instruments like treasury bills, commercial papers, bankersí acceptance, certificates of deposits, etc.
Capital market is a market for long-term debt and equity shares. In this market, the capital funds involving both equity and debt are issued and traded. This also includes private placement sources of debt and equity along with organized markets like stock exchanges. Capital market can be sub-divided into primary and secondary markets.
In the primary market, securities are offered to public for subscription for the purpose of accumulating capital or fund. Secondary market is an equity trading area in where pre- issued securities are traded amongst investors. Secondary market can either be auction or dealer market. Stock exchange is the part of the auction market; Over-the-Counter or OTC is a part of the dealer market.
In the Secondary Market, securities are traded after being initially offered to the public in the primary market or listed on the Stock Exchange. Most of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets