The Capital Market 1. The market in which financial assets such as money in a bank account, shares, debentures are bought and sold is called financial market. A financial agency institution is involved as an adviser or underwriter. The main financial agency institutions in Australia are stockbrokers and merchant banks. The function of the stock exchange and of stockbrokers is to provide facilities for the trading of shares, bonds and other securities such as convertible notes, options and preference shares.
Merchant banks function both as financial agents and as financial intermediaries.
The types of financial intermediaries include banks, merchant banks, authorised money market dealers, finance companies, building societies and credit unions. Banks are primarily financial intermediaries borrowing from depositors and lending to borrowers including governments, businesses and consumers. The Reserve Bank of Australia imposes controls over banks. The majority of finance companies funds are raised by public debenture issues. In the 1990s, finance companies have become specialised institutions focusing on specific areas such as motor vehicle finance.