CandleFocus

Equity Capital Market (ECM)

Candlefocus Editor
Equity Capital Markets (ECM) is the preeminent finanical market for the funding of corporations enabling access to capital for the services, goods and technologies companies develop and distribute worldwide. ECM channels and markets are comprised of a broad network of intermediaries and financial institutions whereby companies are able to access equity capital to fund their growth. The market also includes key players such as investment bankers, traders, and asset management firms who understand the professional dynamics of the market, how best to facilitate transactions, and provide significant insight into the markets for corporate issuers.

Within the ECM there are two large categories: primary and secondary. Primary markets involve the initial offering of shares to the public or private investors in an Over-the-Counter (OTC) market, while secondary markets refer to the exchange markets where corporate equity is publicly traded. ECM activities, then, refer to both the primary market and the secondary market. The primary market involves bringing an IPO to market, this is when a company issues its stock to the public for the first time. This is an important aspect of ECM as companies can capitalise and access ongoing financing, increasing their liquidity in the market. Secondary offerings occur when a company rerises equity to existing shareholders or when existing shareholders are able to sell their shares in the company.

Both primary and secondary markets are central aspects of ECM, each providing benefits and facilitating corporate liquidity within the global markets. Primary equity markets provide access to capital for corporations looking to invest in and grow their business. Ultimately, this is beneficial to investors, shareholders, and those investing in the company through fuelling development and generating returns on their investments. Secondary equity markets are primarily centred around stock exchanges and provide investors with the opportunity to further invest in already existing equity. These markets facilitate trading between investors and companies, ultimately culminating into increased price discovery and improved liquidity within the global markets.

Overall, Equity Capital Markets are of critical importance for companies to access capital allowing them to finance growth and development. Secondary markets are also a cornerstone of the ECM allowing for trading, improved liquidity, and better price discovery. Without the services of ECM, it would be far more difficult for companies to access the capital they need to develop the products, services, and technologies the world has come to rely on.

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