Jul
24

What’s the difference between “money market ” and “securities market”?

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Question by soso: What’s the difference between “money market ” and “securities market”?
Are they same? What’s the difference?

In my text book, “money market funds” and “treasury bills” are under cash equivalents, while trading securities is under marketable securities.

Best answer:

Answer by John S
They’re exactly what their names tell you they are. The “money market” is a wholesale cash market, where cash or “money” (hence the name), is “bought” or “sold” for a short period – overnight to 270 days. The largest financial institutions, corporations and governments participate in this market to raise capital to meet their short term cash obligations. Treasury bills are short term papers issued by the US Treasury Department, for this purpose, that’s why they’re money market instruments.

The “securities market” is again, basically the market for securities, including mainly stocks, bonds, derivatives, structured products and agency securities. It’s where securities are bought or sold, hence the name. Securities where there exists a market for them to be traded are called, again not surprisingly, “marketable securities” such as those listed above.

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