Financial Market, Participants and Instruments
The Treasury market is a financial market where investors can buy and sell U.S. government securities. It is one of the largest and most liquid markets in the world. Here are the key participants, instruments, and market segments in the Treasury market:
Participants:
U.S. Department of the Treasury: The Treasury Department is the issuer of U.S. government securities, including Treasury bills, notes, and bonds.
Primary dealers: Primary dealers are financial institutions that have a direct relationship with the Federal Reserve Bank of New York and are authorized to participate in Treasury auctions.
Institutional investors: Institutional investors, such as pension funds, insurance companies, and mutual funds, are significant buyers of Treasury securities.
Retail investors: Retail investors, including individual investors and small businesses, can also buy Treasury securities directly from the U.S. Treasury through its website or indirectly through mutual funds and exchange-traded funds (ETFs).
Instruments:
Treasury bills (T-bills): T-bills are short-term debt securities with maturities ranging from four weeks to one year. They are issued at a discount from face value and pay no interest until maturity.
Treasury notes (T-notes): T-notes are medium-term debt securities with maturities ranging from two to ten years. They pay interest every six months.
Treasury bonds (T-bonds): T-bonds are long-term debt securities with maturities ranging from ten to thirty years. They pay interest every six months.
Market Segments:
Primary market: The primary market is where new Treasury securities are sold through auctions held by the U.S. Treasury. Primary dealers bid on behalf of themselves and their clients, and the highest bidders are awarded the securities.
Secondary market: The secondary market is where previously issued Treasury securities are traded between investors. It is a highly liquid market, with trading occurring through a network of dealers and brokers.
Repo market: The repo market is where investors can borrow and lend Treasury securities for short periods, typically overnight, in exchange for cash collateral. It is an important source of short-term funding for many financial institutions.
Financial system
A financial system is a network of financial institutions, financial markets, and financial instruments and financial services to facilities the transfer of funds. The system consists of savers, intermediaries, instruments and the ultimate user of funds. The level of economic growth largely depends upon and is facilitated by the state of financial system prevailing in the economy.
Financial Market
Financial markets refer to the network and structural facilities for the transfer of funds between the buyers and sellers of financial assets, services etc. It is financial marker where the funds-surpluses meet the funds-deficits. Financial market does not refer to any physical or geographical location or place, rather denote to the network of communication and dealings among the participants.
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