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Debt markets
Banks are dominant participants in the debt markets. Not only do they borrow money from there but they place surplus cash in debt instruments to earn a return every day. They also act as brokers for clients wishing to buy and sell debt securities, and deal as market makers providing a place for others to conduct trades. They engage in proprietary trading to try to make a return from price movements of debt securities.
The debt markets are vast with a very wide range of different instruments and this chapter provides a brief introduction to the main markets and instruments. Many of the instruments are covered in earlier chapters and so will not be described again here.1 A distinction before we start: the term money markets ...
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