Michelle’s Post

Security markets are comprised of a myriad of securities including bonds and corporate common stock. (Block, S. B., Hirt, G. A., & Danielsen, B. R. (2019) They are separated into short and long term markets, long term being capital markets and short term being money markets. (Black, S. B., Hirt, G. A., & Danielsen, B. R. (2019) Security markets aide in allocating capital to households, corporations and governmental units. Financial institutions help with allocation. (Block, S. B., Hirt, G. A., & Danielsen, B. R. (2019)

They allow companies liquidity by facilitating the quick sale of new issues of securities at fair and competitive prices. They also allow for those investors to be able to turn around and sell them quickly. All with the goal to raise capital, which is then used to grow the economy. The current organization of these markets are traditional organized markets such as the New York Stock exchange. This involved a special group of traders known as Designated market makers, who trade and buy on the floor of the exchange. This is risky because most buy when no one is buying and sell when no one is buying. They will buy when the stock price is falling because they have received a peek at unfulfilled orders to identify areas where they could profit. This stabilizes the markets. Electronic Communication networks automate the matching of buy and sell orders. These exchanges as greatly decreased the activity on the floor. The NASDAQ is a national securities exchange by the SEC that solely trades electronically. The growth of the industrialized world has increased the size and importance of the capital markets around the world. Large U.S. corporations such has IMB, Intel and McDonalds trade in these markets. Dark Pools exist when there is buying and selling occurring out of the public eye. The size and price of an order are often hidden from investors as well as the public. People who are against this think that this will take liquidity out of the public market. Reliance Jio an Indian telecom network raised over 20 billion this last year over the course of 10 corporate funding rounds. Facebook was the largest investor (https://news.crunchbase.com)

https://news.crunchbase.com/news/largest-funding-rounds-of-2020/Links to an external site.

Block, S. B., Hirt, G. A., & Danielsen, B. R. (2019). Foundations of financial management (17th ed.). McGraw-Hill Higher Education.

Justus’s Post

Hello,

The securities market has evolved significantly over the years, with advancements in technology and changes in regulatory frameworks. The NASDAQ was founded in 1971, introducing an electronic trading system that allowed investors to trade stocks electronically, and eventually became a major market for technology companies. The Chicago Mercantile Exchange (CME), founded in 1898, is the world's largest futures exchange, offering trading in various products such as currencies, interest rates, and commodities. Electronic Communication Networks (ECNs) also emerged in the 1990s, allowing traders to buy and sell securities without intermediaries. Additionally, the foreign exchange market has grown with globalization and increased international trade.

Securities markets play a crucial role in the efficient allocation of capital. The Efficient Market Hypothesis (EMH) suggests that asset prices reflect all available information, and thus investors cannot consistently achieve returns above the market average. In an efficient market, prices reflect all available information, which leads to accurate valuation of securities and efficient allocation of capital.

The presence of dark pools, private trading platforms that allow investors to trade large blocks of shares anonymously, can have mixed effects on capital market efficiency. On the one hand, dark pools can enhance liquidity, reduce transaction costs, and increase price efficiency by reducing information leakage. On the other hand, dark pools can also reduce transparency and market integrity by limiting public price discovery, which could lead to market manipulation and harm small investors. Therefore, the effect of dark pools on capital market efficiency depends on the balance between benefits and costs.

In 2020, Airbnb, a home-sharing platform, raised capital through an initial public offering (IPO). An IPO is a common method for companies to raise capital by offering shares to the public for the first time. Airbnb's IPO was highly anticipated, as the company had faced financial difficulties due to the COVID-19 pandemic. The company went public on December 10, 2020, and its shares were listed on the NASDAQ exchange. The IPO raised $3.7 billion, making it one of the largest IPOs of 2020 (Moya, 2020).

In conclusion, the securities market has evolved significantly over time, with the introduction of electronic trading systems, futures exchanges, and foreign exchanges. Securities markets play a crucial role in the efficient allocation of capital, based on the Efficient Market Hypothesis. The effect of dark pools on capital market efficiency is mixed, as it depends on the balance between benefits and costs. Finally, Airbnb raised capital through an IPO in 2020, which was listed on the NASDAQ exchange.

• Justus

Reference: Moya, P. (2020, December 10). Airbnb IPO: Shares soar in biggest US listing of 2020. BBC News. https://www.bbc.com/news/business-55289469Links to an external site.

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