Financial market participants

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Financial market participants" – news · newspapers · books · scholar · JSTOR (September 2007) (Learn how and when to remove this message)

Part of a series on
Financial markets
Public market Exchange · Securities
Bond market
Bond valuation Corporate bond Fixed income Government bond High-yield debt Municipal bond Securitization
Stock market
Common stock Growth stock Preferred stock Registered share Shareholder Stock Stockbroker Stock certificate Stock exchange Watered stock
Other markets
Derivatives (Credit derivative Futures exchange Hybrid security) Foreign exchange (Currency Exchange rate) Commodity ETF Money Mutual fund Option Real estate Reinsurance Structured product Swap (finance)
Over-the-counter (off-exchange)
Forwards Options Spot market Swaps
Trading
Participants Regulation Clearing
Related areas
Alternative investment Angel investor Asset (economics) Asset pricing Banks and banking Bull Climate finance Diversification (finance) Eco-investing Environmental finance ESG Financial analysis analyst asset betting corporate crime forecast personal public services Fintech Greenwashing Growth investing Impact investing Investment management Market risk Market trend Speculative attack Sustainable development goals Sustainable finance
v t e

Part of a series on financial services
Banking
Types of banks Advising Banq Bulge bracket Central Commercial Community development Cooperative Credit union Custodian Depository Development Direct Export credit agency Investment Industrial Merchant Middle market Money center Mutual savings Neobank Offshore Participation Payments Postal savings Private Public Retail Savings Savings and loan Universal Wholesale Bank holding company Lists of banks
Accounts · Cards Accounts Christmas club Deposit Money-market Savings Time deposit (Bond) Transaction (checking / current) Cards ATM Credit Debit Prepaid
Funds transfer Cheque Card Electronic Bill payment Mobile Wire RTGS NS ACH Instant payment Giro SWIFT Correspondent account CLS CIPS SPFS BRICS PAY
Terms Asset allocation management Automated teller machine Bad debt Bank regulation Bank secrecy Asset growth Capital asset Cash Climate finance Corporate finance Disinvestment Diversification (finance) Eco-investing Economic bubble Economic expansion Enterprise value Enterprise risk management Environmental finance ESG Ethical banking Financial analysis analyst asset economics engineering forecast plan planner services Fractional-reserve banking Full-reserve banking Fundamental analysis Growth investing Hedge (finance) Impact investing Investment advisory Investment management Islamic banking Loan Mathematical finance Mobile banking Money creation Pension fund Private banking Sustainability Sustainable finance Speculation Statistical finance Strategic financial management Stress test (financial) Structured finance Structured product Toxic asset
Related topics Asset pricing Bond (finance) Capital structure Corporate finance Cost of capital Equity (finance) Ethical banking Exchange traded fund Financial law market participants regulation risk system History of banking List of banks Market risk Personal finance Public finance Security (finance) Shares Sustainable development goals Systematic risk Systemic risk Time value of money Too big to fail Too connected to fail Watered stock
Category Commons Portal
v t e

There are two basic financial market participant distinctions, investors versus speculators and institutional versus retail. Action in financial markets by central banks is usually regarded as intervention rather than participation.

A market participant may either be coming from the supply side, hence supplying excess money (in the form of investments) in favor of the demand side; or coming from the demand side, hence demanding excess money (in the form of borrowed equity) in favor of the supply side. This equation originated from Keynesian advocates. The theory explains that a given market may have excess cash; hence the supplier of funds may lend it; and those in need of cash may borrow the funds supplied. Hence, the equation: aggregate savings equals aggregate investments.

The demand side consists of: those in need of cash flows (daily operational needs); those in need of interim financing (bridge financing); those in need of long-term funds for special projects (capital funds for venture financing).

The supply side consists of: those who have aggregate savings (retirement funds, pension funds, insurance funds) that can be used in favor of demand side. The origin of the savings (funds) can be local savings or foreign savings. So much pensions or savings can be invested for school buildings; orphanages; (but not earning) or for road network (toll ways) or port development (capable of earnings). The earnings go to owner (Savers or Lenders) and the margin goes to the banks. When the principal and interest are added up, it will reflect the amount paid for the user (borrower) of the funds. Thus, an interest percentage for the cost of using the funds.

An investor is any party that makes an investment. However, the term has taken on a specific meaning in finance to describe the particular types of people and companies that regularly purchase equity or debt securities for financial gain in exchange for funding an expanding company. Less frequently the term is applied to parties who purchase real estate, currency, commodity derivatives, personal property, or other assets.

Speculation, in the narrow sense of financial speculation, involves the buying, holding, selling, and short-selling of stocks, bonds, commodities, currencies, collectibles, real estate, derivatives or any valuable financial instrument to profit from fluctuations in its price as opposed to buying it for use or for income via methods such as dividends or interest. Speculation represents one of three market roles in western financial markets, distinct from hedging, long term investing and arbitrage. Speculators in an asset may have no intention to have long term exposure to that asset.

An institutional investor is an investor, such as a bank, insurance company, retirement fund, hedge fund, or mutual fund, that is financially sophisticated and makes large investments, often held in very large portfolios of investments. Because of their sophistication, institutional investors may often participate in private placements of securities, in which certain aspects of the securities laws may be inapplicable.

A retail investor is an individual investor possessing shares of a given security. Retail investors can be further divided into two categories of share ownership:

1. A Beneficial Shareholder is a retail investor who holds shares of their securities in the account of a bank or broker, also known as "in street name". The broker is in possession of the securities on behalf of the underlying shareholder.
2. A Registered Shareholder is a retail investor who holds shares of their securities directly through the issuer or its transfer agent. Many registered shareholders have physical copies of their stock certificates.

In the United States, as of 2005 about 57 million households owned stocks, and in total, individual investors owned 26% of equities.^[1]

• Do-it-yourself investing
• Financial market efficiency
• Securities market participants (United States)