PRESENTED TO: Mr. Fawad Ashraf

PRESENTED TO: Mr.
Fawad Ashraf
What
Features
Recent Development
Objective
Characteristic Features
Importance
Disadvantage
Composition
Structure
Instruments
As
per RBI definitions A market for short terms financial assets that are close substitute for money, facilitates the exchange of money in primary and secondary market
A segment
of the financial market in which financial instruments with high liquidity and very short maturities are traded
FINANCIAL MARKETS
MONEY MARKET
CAPITAL MARKET
Transaction have to be conducted without the help of brokers
It is not a single homogeneous market, it comprises of several submarket like call money market, acceptance & bill market
The component of Money Market are the commercial banks, acceptance houses & NBFC
To provide a reasonable access to users of short-term funds to meet their requirement quickly, adequately at reasonable cost
To provide a parking place to employ short term surplus funds
Development of trade & industry Development of capital market Smooth functioning of commercial banks
Effective central bank control

Formulation of suitable monetary policy
Non inflationary source of finance to government
Call Money
Commercial Bills
Acceptance Market
Treasury Bill
A variety of instrument are available in a developed money market In Pakistan till 1986, only a few instrument were available
Treasury bills
Commercial Bills
Money at call
Promissory notes
Some new instruments are:

Commercial Papers
Mutual Fund
Certificate of deposit
Money Market
Banker's Acceptance Repo instrument
Repurchase Agreement
It is a short term unsecured loan issued by a corporation typically financing day to day operation
It is very safe investment because the financial situation of a company can easily be predicted over a few months
Only company with high credit rating issues CPs
(T-bills) are the most marketable money market security
They are issued with three-month, six-month and oneyear maturities
T-bills are purchased for a price that is less than their par(face) value; when they mature, the government pays the holder the full par value
T-Bills are so popular among money market instruments because of affordability to the individual investors
A CD Like
is a time deposit with a bank
most time deposit, funds can not withdrawn before maturity without paying a penalty
CDs
have specific maturity date, interest rate and it can be issued in any denomination
The
main advantage of CD is their safety can earn more than a saving account
Anyone
interest
Repo
is a form of overnight borrowing and is used by those who deal in government securities
They
are usually very short term repurchases agreement, from overnight to 30 days of more
The
short term maturity and government backing usually mean that Repos provide lenders with extremely low risk
Repos
are safe collateral for loans
bankers acceptance (BA) is a short-term credit investment created by a non-financial firm

A
BAs are guaranteed by a bank to make payment
Acceptances
are traded at discounts from face value in the secondary market
BA acts as a negotiable time draft for financing imports, exports or other transactions in goods
This is especially useful when the credit worthiness of a foreign trade partner is unknown
Purchasing
power of your money goes down, in case of up in
inflation
Its
loosely integrated structure of interest rates
Irrational Highly
volatile market stringency of loan able funds
Seasonal Lack
of funds in the money market banking facilities
Inadequate
Highly
organized banking system of central bank of proper credit instrument
Presence
Availability Ample
resources of secondary market
Existence
Demand
and supply of fund
Integration Widening
of unorganized sector with the organized sector
of call Money market

of innovative instrument
Introduction Offering
of Market rates of interest of bill culture
Promotion Entry
of Money market mutual funds
Setting
up of credit rating agencies

of suitable monetary policy
Adoption
Summary
The money market specializes in debt securities that mature in less than one year. Money market securities are very liquid, and are considered very safe. As a result, they offer a lower return than other securities. The easiest way for individuals to gain access to the money market is through a money market mutual fund. T-bills are short-term government securities that mature in one year or less from their issue date. T-bills are considered to be one of the safest investments.
A certificate of deposit (CD) is a time deposit with a bank. Annual percentage yield (APY) takes into account compound interest, annual percentage rate (APR) does not.
CDs are safe, but the returns aren't great, and your money is tied up for the length of the CD. Commercial paper is an unsecured, short-term loan issued by a corporation. Returns are higher than T-bills because of the higher default risk. Bankers acceptance (BA) are negotiable time draft for financing transactions in goods

PRESENTED TO: Mr. Fawad Ashraf

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Transaction have to be conducted without the help of brokers

To provide a parking place to employ short term surplus funds

Effective central bank control

Non inflationary source of finance to government

Some new instruments are:

Only company with high credit rating issues CPs

(T-bills) are the most marketable money market security

They are issued with three-month, six-month and oneyear maturities

is a time deposit with a bank

are safe collateral for loans

bankers acceptance (BA) is a short-term credit investment created by a non-financial firm

BAs are guaranteed by a bank to make payment

are traded at discounts from face value in the secondary market

power of your money goes down, in case of up in

loosely integrated structure of interest rates

volatile market stringency of loan able funds

of funds in the money market banking facilities

organized banking system of central bank of proper credit instrument

resources of secondary market

and supply of fund

of unorganized sector with the organized sector

of call Money market

of Market rates of interest of bill culture

of Money market mutual funds

up of credit rating agencies

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