Understanding the Difference Between Capital and Money Markets
The term capital markets is broad and encompasses primary offering and secondary offerings of equity (stock markets and bond markets) and debt as well as private markets which include venture capital, private equity and real estate investment trusts (REITs) assets that also offer equity and debt offerings. Capital markets are considered long-term (more than a year) investments. Money markets, on the other hand, are a vehicle for raising short-term capital and are expected to be fully paid back in less than a year and sometimes overnight.
Capital from money markets provides immediate liquid assets typically used for general operating expenses whereas capital raising is generally used for business investment and/or expansion. The majority of money markets transactions are wholesale transactions among companies and financial institutions that lend and borrow in amounts in the millions. Money market transactions executed by public companies are overseen by the Securities and Exchange Commission (SEC).
Primary vs. Secondary Capital Markets
Capital markets are composed of primary markets and secondary markets. Primary markets refer to the first issuance of securities directly from the issuer as an Initial Public Offering or a Foreign Public Offering. It is a one-time sale with the company issuing the stock as the sale’s beneficiary. Existing or already issued securities are traded on the secondary market and issuing companies have no part in the secondary market. The beneficiary in this transaction is the selling investor. Capital markets transactions are conducted on physical trading floors like the New York Stock Exchange or the London Stock Exchange as well as through data centers or global electronic trading floors in the case of Nasdaq. Capital markets transactions serve a vital role in creating capital and are crucial to the smooth operation of large businesses and governments. Capital market transactions are overseen by the SEC.
What Capital Markets Require
In order to maintain their credibility, organizations must demonstrate transparency in their disclosures, accuracy in their data and timeliness in delivering the information they share with regulators, investors and the public.
Prepare Regulatory Filings
Accuracy and alignment are critical to meeting regulatory requirements. Streamlining how you draft, review and submit your filings will enhance your efforts.
Ensure Security and Confidentiality
Every step in the process involves handling sensitive financial data, which must be protected with rigorous controls to ensure security and confidentiality.
Real-Time Publishing
Meeting market expectations means meeting deadlines and publishing filings in real time, ensuring regulators and investors get the accurate information they need as soon as it’s required.
With issuers, underwriters, advisors and other stakeholders all involved, organizations can benefit from having a tool that will streamline the drafting, review and submission of filings in order to meet real-time publishing needs. Toppan Merrill offers Quinn, a next-generation SaaS platform to support the creation, collaboration, publishing, filing and distribution of complex regulatory disclosure documents, like IPO prospectuses.
What Is a Debt Capital Market?
Debt Capital Markets is a market where companies raise funds by trading debt securities like government or corporate bonds. When an institution raises capital through debt, they are borrowing capital and will repay the debt with interest. Debt issuance does not dilute stock ownership which is an advantageous aspect of debt issuance. With less risk, Debt Capital Markets have a higher volume of business than Equity Capital Markets. Debt Capital Markets transactions executed by public companies are overseen by the SEC.
Navigating the Private Capital Markets
In addition to the publicly traded securities, there are also large private markets where non-publicly traded companies can access capital in exchange for equity in their company. Private markets investors are large, sophisticated traders typically venture capital firms and private equity firms. Because these are private companies without shareholders and private firms making the investment, they do not have to disclose earnings or financials and the transactions are less heavily regulated and not overseen by the SEC.
In addition to Quinn, Toppan Merrill’s best-in-class platforms to simplify capital markets transactions include:
Toppan Merrill Bridge
Built on the Microsoft 365® platform, Bridge streamlines the entire regulatory disclosure document preparation and filing process, unlocking full control, collaboration and confidence to meet SEC EDGAR, iXBRL and other global regulatory requirements.
SOX Automation
Intuitive SaaS technology that maintains all business locations, processes, risks and controls in a single platform, providing full visibility to your overall SOX program.
To reach the experts at Toppan Merrill, send us an email or call 800.688.4400.
