The capital markets are markets where securities (equity and debt) are traded. The presence of capital market helps boost economic growth by offering a number of options for financing for businesses through various financial instruments. On the other hand, it gives an opportunity for individuals and businesses with regard to investment opportunities in various investment instruments so that they can generate an adequate return for their funds. Essentially, a capital market functions as a financial intermediary in order to channel funds from savers to borrowers.
This is composed of suppliers and users of funds. The former is formed with charitable foundations, pension funds, insurance companies, etc. in its group. The latter is comprised of nonfinancial companies, purchasers of houses and vehicles, etc.
Basically, capital markets are activities that put together funds that can be used to help other organizations with their activities that they need help with. The purpose of this is for entities to not worry about conducting search and analysis, creating legal agreements, and completing funds transfer.
Two Types of Markets
This is the kind of market wherein securities, which are financial instruments that have monetary value, are created. The public gets to see private companies sell their new stocks and bonds for the first time as this is where they do it, which is referred to as initial public offering (IPO).
There are also other options to offer stocks without making it known to the public. These options can be called private placement and preferential allotment. The former is about directly offering to major investors. The latter is about offering to specific investors with a price that is not seen by the public.
Regardless of the way that securities are offered, it should be noted that it is a direct purchased from an issuer. There are IPO law firms in Dubai and other law firms that can assist in this kind of market.
This is commonly known as the stock market. Some known stock markets are Nasdaq and New York Stock Exchange. This is where the investors trade with each other. The previously issued securities are traded in the secondary market but the issuing company is not involved anymore as it was already sold to a buyer before and only selling it again.
There are also categories that fall under the Secondary Market, which are auction market and dealer market.
- Auction Market—This is where buyers and sellers both enter competitive bids and offers, respectively. The matching bids, that is to say, the price that a buyer is ready to pay and the seller is good to receive, will then be paired that will start an order.
- Dealer Market—There are a lot of dealers that publish prices on this type of market. These prices refer to the amount of how much they will buy (bid) or sell (offer) securities. A dealer is then referred to as market maker. The primary securities dealt in this market are bonds and foreign exchange.
Debt Capital Markets
There is a market as well wherein firms and the government can organize a funding. This is where debt securities are being traded to support the said funding. This market is called Debt Capital Market. This market assists firms with raising debts from investors that are looking for funding opportunities. With this, debt capital has low rates and are long term. This is usually for refinancing or restructuring an existing debt. This can also be for a potential merger between two firms.
Basically, Debt Capital Markets deal with selling debts to raise operating funds.
There are financial markets specialists who can best assist you with regard to this and any other matter about Capital Market. They can advise you on not just the legal matters but other things that you need to know about Capital Market and Debt Capital Market.
Capital Markets Lawyers
HHS Lawyers & Legal Consultants is one of the best capital markets law firms in the UAE because of its experience that is already 10 years. We have a group of equity lawyers who are well-versed with capital market and securities law and knowledgeable about all the details with regard to equity capital markets and other legal matters that need to be dealt with it. We are here to provide a step-by-step assistance.
We can cover on establishing and developing all dimensions of capital markets: strategy, investment, security analysis, financial products, services, and so on. We are committed to delivering exceptional service to clients to solve issues with regard to the capital market. We consolidate years of experience with a unique set of skills and resources to provide constructive business solutions.
Our services include but not limited to:
- Drafting the prospectus.
- Setting investment policy
- Securities analysis
- Conducting legal due diligence
- Advising on the laws in connection with securities