Rather, they are carried out through oral or written communication or formal documentation. The transactions in the money market do not take place through brokers.
The dealings made are not of money or cash but other instruments like promissory notes, government papers, trade bills, etc.The components of the money market are non-banking finance corporations (NBFCs), acceptance houses, and commercial banks. Typical features of the money market suggest that it bears high liquidity and short maturity.Under the financial market, there are two categories of Money Market and Capital Market.The money market is a systemized framework which enables the borrowing and lending of instruments that are usually for a basis of less than a year.The assets are a close substitute for money and enable money exchange in the primary and secondary markets. These assets have a maturity period of either one year or less. OverviewĪs per the Reserve Bank of India (RBI), the term Money Market is referred to as a market where short-term financial assets are traded. We shall explore more on the meaning, features, objectives, types, and instruments. The market is considered as a safe haven for investment for the reason that it involves highly liquid securities.īanking and finance aspirants can learn more about the money market in the following article.Money market comprises negotiable instruments like certificates of deposits, commercial papers, treasury bills, etc.Whereas, at retail level, it includes money market mutual funds purchased by individual investors and bank customers who open money market accounts. At wholesale level, it involves huge volume trades between traders and institutions.Money market enables the trading of short-term debt investments at wholesale and retail levels.
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