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2. Securities Markets and the
Development of the Eastern Caribbean Securities Market.
Extract
A securities market is an important part of any modern economy.
It is the link between companies or governments needing funds
and persons with money to invest.
A company wishing to create more jobs, generate additional
revenue or build new factories to expand its operations sells
pieces of ownership in the company, called stocks or shares,
to the public. The people who buy these instruments, called
securities, become part owners and are able to participate
in the growth and development of those companies.
Similarly, Governments needing to pay off maturing debts
or find financing for capital expenditure go to the market
to borrow money. They are able to raise funds by offering
securities in the form of treasury bills, notes and bonds
to the public. The purchasers of these securities provide
loans to the governments, who commit to repay them, with interest,
over time. Some companies also borrow money from the public
by issuing corporate bonds.
When securities are offered to the public for sale the first
time, that is, at the initial public offering (IPO), they
are sold in the primary market. The original purchasers of
these instruments are able to resell them in a secondary market,
by listing them at a central point, the securities exchange,
where trading takes place.
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Securities Markets and the Development of the