what are the main functions of financial markets 
financial markets exist for several reasons but the most fundamental function is to allow for the efficient allocation of capital and assets in a financial economy by allowing a free market for the flow of capital financial obligations and money the financial markets make the global economy run more smoothly while allowing investors to participate in capital gains over time the bottom linefinancial markets provide liquidity capital and participation that are essential for economic growth and stability without financial markets capital could not be allocated efficiently and economic activity such as commerce and trade investments and growth opportunities would be greatly diminished many players make markets an essential part of the economy firms use stock and bond markets to raise capital from investors speculators look to various asset classes to make directional bets on future prices at the same time hedgers use derivatives markets to mitigate various risks and arbitrageurs seek to take advantage of mispricings or anomalies observed across various markets brokers often act as mediators that bring buyers and sellers together earning a commission or fee for their services 