"Money market" here refers to the short-term trading of financial instruments, e.g., short-term securities, whereas "capital market" represents trading of long-term financial instruments, e.g., bonds.
In 1999 Cantor launched eSpeed, to allow electronic trading of financial instruments.
It is the private trading of complex instruments that lurk in the financial shadows that worries regulators and Wall Street and that have created stresses in the broader economy.
But it is also because regulators are likely to push the trading of more instruments onto exchanges, where margins are narrower, as a result of market-rigging scandals affecting currency trading and interest rates.The tides of finance have almost certainly turned.
In Mr. Crowley's case, for example, he attended a fund-raising event at the home of a financial industry lobbyist on the same evening he voted against a series of amendments to the regulatory overhaul bill that would have required greater transparency in the trading of financial instruments known as swaps, or banned certain kinds of swaps altogether.
Clearly the viability of such a system depends on the number of firms using it, and changing existing corporate behaviour will take time.However, over the next few years some such model seems likely to succeed, including perhaps a big increase in direct trading of financial instruments between non-bank corporations.
This transaction activity, covering everything from stockmarket flotations to complex derivatives, is a vital source of income, as is the trading of those instruments when issued.Any shock that dries up liquidity is a threat to the financial sector, and the markets.
"Diversification seems to be the name of the game for exchanges at the moment," said Cubillas Ding, an analyst at Celent, "it's no longer sufficient be a venue that is aligned with the trading of particular instruments".
Lay's offer to Rubin was part of a long lobbying effort by Enron and other financial companies to make sure that the trading of financial instruments known as derivatives was left unregulated.
Moving the selling and trading of these instruments into separate entities will increase transparency by bringing derivatives out of the shadows so that dealers can be more easily regulated and the prices and volume of purchases and sales in the market will be readily available to counterparties.
