Financial markets constitute a fundamental component of the capitalist economic system, serving as platforms for the allocation of capital and the creation of liquidity for both businesses and individual entrepreneurs. They function by enabling the exchange of financial assets between parties, thereby connecting those with surplus funds (investors or lenders) to those requiring capital (borrowers).

These markets generate financial instruments—such as equities, bonds, currencies, and derivatives—that offer returns to investors while channeling resources toward productive activities. Transparency of information is essential, as it underpins fair and efficient price determination.

While some financial markets operate on a relatively small scale with limited trading volume, others, such as the New York Stock Exchange (NYSE), facilitate transactions worth trillions of dollars daily. Equity markets, in particular, provide a mechanism for investors to acquire and transfer ownership in publicly listed companies. New securities are issued and sold in the primary market, while the secondary market enables the resale and exchange of existing securities among investors.