Who Are the Key Players?
The smooth functioning of financial markets depends on the interaction between various participants. These can be broadly categorized into the buy-side (those who buy securities) and the sell-side (those who issue, sell, and trade securities).
The Buy-Side
The buy-side includes institutions and individuals who purchase investment securities for their own accounts or for others. Their goal is to make a return on their investments.
- Individual Investors: Also known as retail investors, these are individuals investing for their own personal goals.
- Institutional Investors: These are organizations that pool large sums of money and invest those sums in securities. Examples include mutual funds, pension funds, and insurance companies.
The Sell-Side
The sell-side includes firms that provide a range of financial services, including issuing, selling, and trading securities.
- Investment Banks: They help companies and governments raise capital by underwriting and issuing new securities. They also advise on mergers and acquisitions.
- Brokers and Dealers: A broker executes trades on behalf of others, while a dealer trades for their own account. Many firms, known as broker-dealers, do both.