Cash market is a marketplace where immediate settlement of commodities takes place in this market between the purchaser and the seller.This is also known as spot market cash market transactions take place over the counter or in a regulated exchange in contrast transactions take place exclusively on exchange. Price of cash market is usually less than futures market this market has two day delivery period due the time duration to move cash from one place to another.
In this market most speculative retail trading is done as spot transactions are on a online platform in this market the moral context speculation is considered negatively. Then there is also a part of this market known as energy spot market where surplus energy producers instantly spot purchasers or buyers for energy and negotiate prices within milliseconds and deliver the energy. In this market securities are traded in a possibly changing current market place.
Cash market is different from future market in that delivery takes place immediately. So, if you wish to purchase Company ABC shares and own them immediately, you should go for the cash market on which the shares are traded If, however, you want to buy a contract that entailed taking possession of Company ABC shares, you should seek out the futures exchange on which the shares of ABC company trade.
The difference between cash and future markets is that Cash markets are for supply and demand, whereas futures markets are also influenced by expectations about the prices later, storage costs, weather predictions (for perishable commodities in particular), and other factors also influence the future market. This market is important for companies because it allows companies with a temporary cash to invest in short term securities companies with a shortage of cash then the market acts as a repository for short term funds large companies generally handle their own and take participation in the market through dealers.
Securities which are purchased in this market have lesser risk than in the long term debt but are also not fully risk free after banks fail sometimes any company’s fortune can change rapidly the borrowers who have some few credentials have difficulty getting money from this market until or unless taken from an established fund.
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