Glossary
The market in which securities already in issue are traded between investors, with no new money going to the issuer.
What Are Capital Markets?
from Capital Markets
Capital markets are the venues and mechanisms through which companies and governments raise long-term funding by issuing securities — shares or debt instruments — to investors. The primary market is where new securities are created and sold for the first time (an IPO or a bond issuance), while the secondary market is where existing securities are traded between investors (the London Stock Exchange, for instance). The distinction matters because lawyers advising on a primary market transaction focus on disclosure, structuring, and regulatory compliance, whereas secondary market work centres on trading rules, market abuse, and ongoing obligations.
IPO (Initial Public Offering)
The first sale of a company's shares to the public, marking its transition from a private to a publicly listed entity.
Prospectus
A legal document disclosing all material information about the issuer and the offering, required for public offers of securities.
Underwriting
The commitment by an investment bank to purchase all or part of a securities offering, guaranteeing the issuer raises its target funds.
Bookbuilding
The process of gauging investor demand at different price levels to determine the final offer price of an IPO or bond.
Coupon
The periodic interest payment made to a bondholder, expressed as an annual percentage of the bond's face value.
Covenant
A binding promise in a bond's terms restricting the issuer's conduct (e.g., caps on additional debt) to protect investors.
Free Float
The proportion of a listed company's shares that are available for public trading, excluding shares held by insiders or strategic investors.
Yield
The annual return an investor earns on a bond, accounting for its coupon payments and the price paid for it.