The activity of trading of short term debt instruments by individuals or mutual funds or big financial houses etc is termed as money market activity and the system in which these are performed is known as money market. As these are short term funds of various kinds the return on them is low but being debt instruments, they have good safety. Generally money market transactions are done at a wholesale level by buying or selling large quantities of these instruments. There are various types of money market investment avenues and instruments and some of them are Money Market Funds, Certificates of Deposit (CDs), Commercial Paper (CPs), Banker's Acceptances, Repos etc.
Money market is an important part of our financial and economic system and through this a large amount of funds is transferred against the financial instruments or securities from one bulk investor to other. These investors could be individuals, banks, mutual fund houses, financial companies, normal companies etc. Many companies raise cash for their short time needs through this route. At the same time many companies park their surplus funds for short time in this popular investment route. Money market works in a very interesting manner and through it companies can get short time loans from the banks or financial institutions through issue of some instruments which can again be traded by the respective agencies if such a need arises. So, in essence, money market is a place where one can get or give money for a short period depending upon the need and it is all done through money market instruments of various kinds.
There are brokers who facilitate these transactions to the interested customers (individual or institutional) and get their commission out of that. As deals are generally in bulk and have large value, the brokers also get a good money for their services rendered.
As an individual one can invest in money market instruments through one's Demat account (usually opened for share market and mutual fund transactions) or money market account which can be opened in any bank or financial institution providing that service.
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