Capital Market Law



Capital markets are financial markets where long-term debt- or equity-backed securities are bought and sold, usually requiring investments of longer than a year. In the U.S. these markets are overseen by the Securities and Exchange Commission (SEC).

Modern capital markets are mostly computer-based electronic trading systems that can be accessed only by entities within the financial sector or the Treasury Department. Some also allow direct access to members of the public. Thousands of these systems each serve small parts of the overall capital markets. Stock exchanges, government departments, and investment banks often host these systems.

Primary Versus Secondary Markets

A key division among capital markets is between primary and secondary markets. In primary markets, newly issued stocks or bonds are sold to investors, often through a process called “underwriting.” This is a favorite means for governments to raise capital, as well as corporations. Government entities tend to issue only bonds, while corporations often issue either equity or bonds. These investments are often purchased by pension funds, hedge funds, sovereign wealth funds, and a few wealthy individuals and investment banks that trade on their own behalf.

Secondary markets, on the other hand, deal with existing securities that are re-sold and bought among investors or traders. This is usually done on an exchange or over-the-counter. Secondary markets encourage investments in primary markets because they allow investors to quickly liquidate their investments and cash in should the need arise.

Stocks Versus Bonds

Another key distinction in the capital market is between stocks and bonds. With stocks, an investor buys equity securities, also known as shares, and acquire partial ownership interest in the company (usually only a tiny fraction per share). Bonds, on the other hand, allow investors to become straight creditors of the companies in which they invest, taking no ownership but purchasing an obligation to have their money paid back with interest.

For more information on capital markets, please refer to the materials found below. Additionally, you can find attorneys who may be able to assist you with your legal questions related to these topics on our Law Firms page.

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Capital Markets Law - US

  • ABA - Securities, Capital Markets and Derivatives

    Securities powers, products and activities of bank holding companies and banks are targeted by the Securities Activities Subcommittee, including "Section 20" companies, mutual funds, investment advisory services, commercial paper and annuities; SEC regulation of banks and bank holding companies and securities oversight by banking regulators; disclosure and corporate financial reporting issues for banks and bank holding companies; and operating procedures for banks and bank holding companies in conducting securities activities, including firewalls, licensing, compliance, examinations.

  • Capital Markets - Definition

    A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year[1], as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt).

  • Center for Audit Quality

    The Center is an autonomous, nonpartisan, nonprofit group based in Washington, D.C. It is governed by a Board that comprises leaders from the public company auditing firms, the American Institute of CPAs and the investor and issuer communities. The organization is affiliated with the American Institute of CPAs.

  • Committee on Capital Markets Regulation

    The Committee on Capital Markets Regulation is an independent and nonpartisan 501(c)(3) research organization dedicated to improving the regulation of U.S. capital markets. Thirty-two leaders from the investor community, business, finance, law, accounting and academia comprise the Committee’s membership.

  • Committee on Financial Services - Capital Markets, Insurance, and Government Sponsored Enterprises

    Led by Chairman Paul E. Kanjorski (PA), the subcommittee reviews land authors laws and programs related to the U.S. capital markets, the securities industry, the insurance industry generally (except for health care), and government-sponsored enterprises, such as Fannie Mae and Freddie Mac. It also oversees the Securities and Exchange Commission and self-regulatory organizations, such as the New York Stock Exchange and the NASD, that police the securities markets.

  • Dodd-Frank Wall Street Reform and Consumer Protection Act

    A bill to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.

  • RAND Law, Finance, and Capital Markets Program

    The RAND Institute for Civil Justice has launched a research initiative to analyze an emerging development in civil dispute resolution in the United States, namely, the provision of capital and capital market products for legal claim holders, those defending against claims, and their respective lawyers.

  • Securities and Exchange Commission

    The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever.

Organizations Related to Capital Markets Law

  • BDO - Access to Capital Markets

    BDO is well prepared to assist companies with access to capital markets, both in the United States and worldwide. We currently serve over 300 domestic publicly traded clients and more than 100 international publicly traded entities. We have assisted many of these entities not only with their ongoing SEC filings, but also with their public offerings. We have also assisted these and many other clients with private placements.

  • Center for Capital Markets Competitiveness

    The mission of the U.S. Chamber's Center for Capital Markets Competitiveness (CCMC) is to maintain and advance America's global leadership in capital formation by supporting capital markets that are the most fair, efficient, and innovative in the world.

  • Financial Accounting Standards Board

    The mission of the FASB is to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports. That mission is accomplished through a comprehensive and independent process that encourages broad participation, objectively considers all stakeholder views, and is subject to oversight by the Financial Accounting Foundation’s Board of Trustees.

  • International Capital Market Association (ICMA)

    ICMA’s mission is to make sure that the international capital market works as efficiently as possible. To this end it promotes best market practice by maintaining the framework of cross border issuing, trading and investing through development of internationally accepted standard market practices. It also liaises closely with governments, regulators, central banks and stock exchanges, both at national and international level, to ensure that financial regulation promotes the efficiency and cost effectiveness of the market.

  • NYSE Euronext

    NYSE Euronext, the holding company created by the combination of NYSE Group, Inc. and Euronext N.V., was launched on April 4, 2007. As the world's leading and most liquid equities exchange group, NYSE Euronext powers the exchanging world and is comprised of equities and derivatives exchanges across the United States and Europe which trade cash equities, futures, options, fixed-income and exchange-traded products.

Publications Related to Capital Markets Law

  • Capital Markets Law Journal

    Capital Markets Law Journal is essential for all serious capital markets practitioners and for academics with an interest in this growing field around the World. It is the first periodical to focus entirely on aspects related to capital markets for lawyers and covers all of the fields within this practice area: Debt; Derivatives; Equity; High Yield Products; Securitisation; and Repackaging. With an international perspective, each issue covers articles and news relevant to the financial centres in the US, Europe and Asia.

  • Financial Times

    Provides the latest US and international business, finance, economic and political news, comments and analysis.

  • How the SEC Protects Investors, Maintains Market Integrity and Facilitates Capital Formation

    The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever.

Articles on HG.org Related to Capital Markets Law

  • United Nations Convention and its Impact on Contracts for the Sale of Goods
    The United Nations conventions and other meetings are in place to ensure uniform and reasonable regulations are in place across several countries with certain international concerns. Among these is the sale and export of goods between borders and across the United Nations.
  • Going Public Options for Foreign Companies
    Going Public Options for Foreign Companies
  • Form 10 Shells l Reverse Mergers
    Issuers seeking to raise capital often attempt to go public using a reverse merger with a public shell. Blank check companies that file Form 10 Registration Statements (“Form 10 Shells”) are marketed as handy vehicles private companies can use to go public easily.
  • Form 10 Registration Statements
    Form 10 is a Registration Statement used to register a class of securities pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“Exchange Act”). This article addresses common questions we receive from clients about Form 10 registration statements.
  • DTC Chills: A Big Conspiracy or Just Fraud?
    The Depository Trust Company (DTC) is the only stock depository in the United States. When DTC provides services as the depository for an issuer’s securities, its securities can trade electronically.
  • Going Public l OTCMarkets OTCQB
    Many private companies seeking to go public are opting to list on the OTCMarkets OTCQB. The OTCMarkets Group operates an electronic inter-dealer quotation system called OTC Link.
  • OTCMarkets Disclosure Tiers
    Companies who go public can list on national securities exchanges such as NASDAQ, the American Stock Exchange or the New York Stock Exchange. The securities of companies who go public can also be quoted by The OTCMarkets Group, Inc. (“OTCMarkets”).
  • Market Makers 101
    The last step in going public transactions is for the soon-to-be-public company to obtain a stock trading or ticker symbol. In order to obtain a ticker symbol, the company seeking to go public’s stock must first be listed on a national securities exchange or qualify for quotation on the OTCMarkets’ Pink Sheets, OTCQB, or OTCQX markets.
  • Rule 144’s Adequate Current Public Information Requirement
    Rule 144(c) of the Securities Act of 1933, as amended (the “Securities Act”) requires that stockholders of public companies relying upon Rule 144 satisfy its adequate current public information requirement. The requirements depend upon whether the issuer is a reporting or non-reporting company.
  • Form 211 l Going Public l OTC Pink Sheets
    Many private companies that go public are opting for the listing on the OTCMarket’s Pink Sheets due to the increased costs and more stringent regulations associated with Securities and Exchange Commission (“SEC”) reporting.
  • All Banking and Finance Law Articles

    Articles written by attorneys and experts worldwide discussing legal aspects related to Banking and Finance including: asset protection, capital markets, corporate finance, financial planning, financial services law, investment law, offshore accounts, private equity, project finance, public finance, securities, trade investment and venture capital.




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