Securities markets primer
In this chapter: Equity, debt, money market · Role of SEBI, exchanges, depositories
Securities markets channel savings to issuers (companies, governments) who need capital. Equity gives ownership; debt gives a claim to fixed income. Money market is short-duration debt (under 1 year). India has two main exchanges (NSE, BSE) and two depositories (NSDL, CDSL). SEBI regulates the entire ecosystem.
The equity market is divided into primary (IPOs/FPOs) and secondary (regular trading). Debt markets include sovereign bonds (G-Secs), corporate bonds, and money market instruments (T-Bills, CDs, CPs). Mutual funds buy from these markets — equity funds from secondary equity, debt funds across debt categories. Liquidity differs dramatically: large-cap equities trade by the second; corporate bonds may trade once a week; small-cap equity orders can move prices.
An exam-relevant nuance: AT-1 bonds (Additional Tier 1, perpetual bank bonds) and their treatment. The 2020 Yes Bank AT-1 write-off shocked retail investors who were sold these as "FD-like". Understanding the actual risk profile of a security beyond the marketing label is what separates a competent distributor from a salesperson.