Financial market : A dematerialized spiderweb

When we think about Financial Trade, we often think about traders yelling in a trading room. But, luckily, there is much more to it.

A lot of stakeholders working together

The financial trade business is like a spider web where each and every team member has a specific part to play. All the stakeholders are in fact liked in some way and they have to work through all the technicalities of the financial market. Traders like Nathaniel Glas, who is an expert and has been a financial trader for many years, need to work altogether without even knowing each other. It’s like a dance where you have to guess the steps in order to make profit for your clients.

The financial market is a market in which people, private companies and public institutions can negotiate financial securities, raw materials and other assets for a price reflecting offer and demand of the market at this time. Securities cover shares, bonds, as well as staple products such as precious metals. As in a regular market, the idea is quite simple. Products, buyers, and sellers, which can either be companies, households, or even governmental agencies.

A financial market, what for ?

The purpose of the financial market is to facilitate capitals’ raise and investment ( on the capital market), risk transfer, rate and value establishment, cash flow movements and international trade. Financial trade and its market rest on risk spread. That’s when a trader can be very useful. In fact, the trader knows the financial market as it is right this second and financial markets are his playroom. With his expertise, he can listen to the market and make the right calls at the right time to make profit based of that risk.

Financial trade is a tricky game to play, especially these days with it being almost completely dematerialised. Indeed, today the financial market is closer to a data network than an actual market as it used to be. Some stock exchanges like Paris are just empty buildings. What we call “dematerialization” is in fact the disappearance of the good old paper securities which was at the time a physical share of the company.

However, the financial market, as virtual as it is today,  is not lacking reality. It actually gets stronger as, thanks to this dematerialization, financial trade doesn’t need to happen in a specific location anymore. Therefore, it is turning increasingly in an open market and sees its credibility growing for it.