FINANCIAL MARKET Financial market is an important component of the financial system.

A financial market is a market in which people and entities can trade financial securities, commodities. The participants in financial market are the borrowers (issuer of securities), Lenders (buyers of securities) and financial intermediaries. In finance, financial markets facilitate:

The raising of capital (in the capital markets) The transfer of risk (in the derivatives markets) Price discovery Global transactions with integration of financial markets The transfer of liquidity (in the money markets) International trade (in the currency markets)

Financial markets are a mechanism enabling participants to deal in financial claims. This market also provides a facility in which their demands and requirements interact to set a price for such claims. Financial market comprises two distinct types of markets: (1) Money market (2) Capital market

Financial market can also be classified as primary and secondary markets. While the primary market deals with the new issues, the secondary market is meant for trading in outstanding or existing securities. There are two components of the secondary market i.e. Over The Counter(OTC) market and the exchange traded market. The government securities market is an OTC market. In an OTC market, spot trades are negotiated and traded for immediate delivery and payment while in exchangetraded market, trading take place over a trading cycle in stock exchanges.

Financial Market of Indonesia Even though significant progress was achieved in couple of years, Indonesian financial market is still considered in an early stage of its development. Indonesia financial market is considered as too traditional or too conventional. The financial market is mostly influenced by government debt instrument. The most of the development of financial market of Indonesia took place from the year 1997-1998. The global growth outlook of Indonesia remains weak. The GDP growth in the first quarter of 2011 was 6.5 percent and in 2012 it GDP decreases to 6.3 percent. In 2002, Sun market was established, when bank were allowed to trade their recap bond holding. The transaction in SUN market is being dominated by outright transaction. The daily outright trading volume of SUN is just around 6.5 trillion and 300 transaction within the last two years The development of repo market can be considered as a starting point to increase financial market liquidity. This will increase efficient banking liquidity and portfolio management, as well as government financing It is also important to encourage the establishment of broader self regulatory organization (SRO) in domestic financial market that covers all segments in the market, to provide convention for various market transactions, and to assist in monitoring OTC market, as well as a counterpart for the authorities and regulators Indonesias financial market need to be develop To increase the efficiency of financial portfolio management and to strengthen liquidity risk Management and due to this there is also increase in effectiveness of monetary policy from bank. The most prominent investors in the Indonesia Financial Market are:

Indo Acidatama TBK. Pan Brothers Tex TBK. Alakasa Industrindo TBK. Agis TBK. Cahaya Kalibar TBK. Radiant Utama Interinsco TBK. Bank Mayapada International Jaka Inti Realtindo TBK. PANASIA INDOSYNTEX TBK. BAT INDONESIA TBK