Question

1- Define and give examples of capital markets.

2- What is the impact of technological change on capital market? Give examples to justify your input.

Answer 1

1. A capital market is an regulated market that sells and trades debt and equity securities for both individuals and business organizations (such as pension funds and corporations). This market is a crucial source of funds for an company whose shares are permitted to be exchanged by a regulatory authority, because it can easily sell its debt and equity obligations to investors. Governments also use capital markets to raise funds, typically through the issuance of long-term bonds. Governments do not sell bonds, and thus can not sell securities on equity.

The New York Stock Exchange, the Australian Stock Exchange, the London Stock Exchange and the NASDAQ are examples of highly structured capital markets. Securities can also be traded "on the counter" instead of on an regulated market. These securities are typically issued by companies whose economic metrics (e.g. sales, capitalization, and profitability) do not meet the minimum requirements of a regulated exchange, which allows investors to use other ways to trade the securities.

2. The relatively high barriers to entry, such as capital requirements and substantial levels of regulatory oversight, have resulted in a less pronounced effect in terms of technology and innovation disruption within the capital markets sector to date.
Nonetheless, banks are increasingly faced with the need to engage with emerging innovations to tackle long-term market challenges such as rising regulatory requirements, persistently low interest rates and continuing pressure on their returns. In addition, banks face challenges in meeting the growing demands of their customers and in using technology to innovate with new products and services

Information protection remains an urgent and short-term priority due to the current regulatory attention on this issue (e.g. the EU General Information Protection Regulation or 'GDPR' and India's draft Personal Data Protection Bill) and the need to develop existing data technologies to facilitate potential technological change and innovation; Nonetheless, the benefits will depend on the expenditure and data protection changes (notably data access and quality). AI is expected to be fairly well implemented by year four, thus being less of a priority element compared to other technologies;