Capital Market versus Stock Market

Crossing Photo by M. B. M. on Unsplash

Chief Executive Officer Matt Eitner’s job with Laidlaw & Company, based in New York City, involves assisting clients in making wealth management decisions. As an investment banker and asset manager, Matt Eitner works in both the capital and stock markets to advise clients of the best ways to build their portfolio. Capital markets differ from the stock market in a few key ways.

One core difference is in the scope of what is traded in each type of market. Capital markets encompass a wide range of investments, of which the stock market is one category. A broad range of securities are traded on the capital market, including derivative options, such as debt, and commodity futures, which involve buying and selling raw material at specific dates at specific prices. The stock market, alternatively, is constrained to the buying and selling of shares in companies that have gone public.

Another difference relates to who has access to these markets. Some capital markets are accessible to the public, however, some markets are only accessible by large institutions. Within the capital markets, stocks on the NYSE and NASDAQ are accessible by the public.

Finally, capital markets are comprised of primary and secondary markets. Primary markets function to sell shares of stock to specific investors through an initial public offering (IPO), and the secondary market is the stock market, where buyers and sellers meet to trade shares.