General Finance market is, by definition, an environment of buying and selling of securities (stocks, options, bonds), exchange (foreign currencies) and commodities (gold, agricultural products).
In these negotiations, several institutions are involved, which facilitate the meeting between agents and regulate and supervise the transactions.
In the General Finance market, the investor is the one who has money left over and wants to multiply it.
The paths to this are diverse, but they start from the same premise: the money is destined to an application that offers valorization according to guidelines agreed between the parties.
In fixed income, for example, the investor can project the yield at the time of the investment: he will know if the money will be valued in fixed form, with a definite, post fixed annual interest, linked to an indicator, or hybrid, paying a fixed interest plus the change in a price index.
Already in variable income, on the other hand, there is no guarantee of return. An investment in the stock of a company on the stock exchange can be valued or devalued, depending on the market interest.
But if on one hand there are investors, what's on the other end of the General Finance market? The resource takers. They are companies, institutions or people who want to raise money for various purposes such as debt repayment, machinery financing, among others.
Main financial market institutions
Check below are some of the main General Finance market institutions:
Brazilian central bank
Created at the end of 1964, the Central Bank of Brazil, also called Bacen, BC or BCB, is an autarchy of the National Financial System, linked to the Ministry of Finance.
It is the main financial institution of the country. It serves as depositary of the National Treasury and many others. Check out:
Foreign exchange reserves of the country (in gold and dollar)
Monitoring and supervision of the national financial system
Issuance of paper money and coin
Definition of control of national and foreign currency in the country and regulation of interest rates
Provision of liquidity and assistance to members of the financial system to ensure market balance.
The Securities and Exchange Commission seeks to monitor the securities market, restricting and punishing institutions that do not comply with established guidelines.
Financial institutions are commercial banks, brokerages, development banks, credit unions, finance companies, brokerage firms, investment banks, among others.
Financial Market Subdivisions
The financial market may be subdivided as follows:
The Capital Market deals with securities, stocks and derivatives in stock exchanges, brokerage firms and other financial institutions.
When you invest in an LCI or LCA from an investment bank, you are investing in the capital market. When you buy a lot of stock on the stock exchange, too.
The credit market is where short-, medium- and long-term resources are traded for people and companies seeking capital for working capital or consumption.
The Central Bank is responsible for controlling and regulating this market and, through the Monetary Policy Council, dictates the basic interests of the economy, which are reflected in the loans.
The foreign exchange market is where the exchange of a nation's currency takes place for the currency of another country. When you travel to the United States and want to buy dollars to secure your purchases or a ride at Disney, you are working in the foreign exchange market.
The money market is where short-term loans are made, with maturities of less than one year. Trading is mainly through Treasury bonds. The Central Bank and financial institutions are the agents of this market.
Posted on June 08, 2018 at 05:41 PM