Markets, Assets & Participants
Szymon Kopyciński · 23 September 2026
1. Markets and instruments
Asset
Something with economic value that can be owned or traded.
Examples include shares, bonds, currencies, commodities and derivatives.
Security
A tradable financial asset.
Shares and bonds are securities. The term is narrower than asset, although in everyday conversation the two are often used interchangeably.
Instrument
A general term for something that can be traded.
An instrument could be a share, future, option, currency pair, bond, swap or another financial contract.
In trading systems, instrument is the usual generic term.
Equity
Ownership in a company.
If you buy one share of a publicly listed company, you own a very small piece of that company.
Equities are commonly referred to as stocks or shares.
Bond
A debt instrument.
When an investor buys a bond, they are lending money to the issuer, which may be a government or company.
The issuer usually pays interest (the coupon) and repays the principal at maturity.
Commodity
A physical good traded in financial markets.
Examples include oil, natural gas, gold, copper, wheat and coffee.
Most commodity trading is done through futures rather than by exchanging the physical commodity.
FX / Foreign Exchange
The market for currencies.
Currencies are quoted as pairs. For example:
GBP/USD = 1.35
means one pound is worth 1.35 US dollars.
Spot
A transaction in an asset for near-immediate settlement.
The spot price is the current market price for immediate delivery rather than delivery at a future date.
Derivative
A financial instrument whose value depends on something else.
The thing it depends on is called the underlying.
Options, futures, forwards and swaps are all derivatives.
Underlying
The asset or variable from which a derivative derives its value.
For an option on Apple shares, Apple stock is the underlying.
For an oil future, oil is the underlying commodity.
Index
A constructed measure representing the value of a group of assets.
Examples include the S&P 500, FTSE 100 and NASDAQ-100.
You cannot buy an index directly, but you can trade products that track it, such as ETFs and index futures.
ETF
Exchange-Traded Fund.
A fund whose shares trade on an exchange like a stock.
An ETF may track an index, sector, commodity, bond portfolio or another collection of assets.
2. Exchanges and market structure
Exchange
A regulated venue where buyers and sellers trade financial instruments.
Examples include the London Stock Exchange, NASDAQ, CME, Eurex and the New York Stock Exchange.
Most modern exchanges are fully electronic.
Venue
A general term for somewhere an instrument can be traded.
An exchange is one type of venue, but not every trading venue is an exchange.
OTC
Over-the-Counter.
Trading conducted directly between counterparties rather than through a central exchange.
Many derivatives, bonds and FX products trade OTC.
Primary market
The market where securities are first issued.
When a company sells newly issued shares in an IPO (initial public offering), those shares are sold in the primary market.
Secondary market
The market where existing securities trade between investors.
Most everyday stock trading happens in the secondary market.
Market fragmentation
A situation where the same or related instruments trade across multiple venues.
A trader may therefore need to monitor several venues at once rather than a single definitive market.
Dark pool
A private trading venue where orders are not publicly displayed before execution.
Dark pools are used mainly by institutional investors executing large trades.
Auction
A period during which an exchange collects orders and then determines a single clearing price at which they execute.
Opening and closing auctions are particularly important in equity markets.
Trading halt
A temporary suspension of trading in an instrument.
Halts may occur because of extreme price movements, significant news, technical problems or regulatory requirements.
Circuit breaker
A mechanism that temporarily halts or restricts trading after sufficiently extreme price movements.
The pause gives participants time to process unusual conditions.
3. Firms and participants
Buy side
Firms that primarily manage or invest capital.
Examples include:
- hedge funds;
- asset managers;
- pension funds;
- sovereign wealth funds.
Proprietary trading firms are often treated as neither buy side nor sell side.
Sell side
Institutions that provide services, liquidity, execution, research, financing or products to clients.
Investment banks and broker-dealers are classic examples.
Hedge fund
An investment fund with considerable flexibility in the strategies, instruments, leverage and exposures it can use.
Proprietary trading firm / Prop shop
A firm trading with its own capital.
Its profits and losses accrue directly to the firm rather than to external clients.
Market maker
A participant that quotes prices at which it is willing to buy and sell.
Market makers are a major source of liquidity.
Broker
An intermediary that executes transactions on behalf of clients.
Broker-dealer
A firm that both executes transactions for clients and trades for its own account.
Institutional investor
A large organisation investing substantial pools of capital.
Examples include pension funds, asset managers, insurers and hedge funds.
Retail trader
An individual trading through a brokerage account rather than on behalf of an institution.
Counterparty
The party on the other side of a financial transaction.
4. Quant roles
Quantitative Researcher / QR
A researcher applying mathematics, statistics, computing and financial knowledge to develop models or trading strategies.
Quantitative Trader / QT
A trader working with systematic strategies and quantitative methods.
The distinction between researcher and trader varies between firms.
Quant Developer / Quant Dev
An engineer working close to quantitative research or trading systems.
The role can include implementing models, research infrastructure, execution systems, data pipelines or production trading systems.
Software Engineer / SWE
An engineer designing and building software systems.
Within trading firms, SWE roles span market data, execution, distributed systems, infrastructure, networking, developer tooling, risk systems and research platforms.
Execution trader
A trader specialising in executing investment decisions while minimising costs and market impact.
Portfolio Manager / PM
A person responsible for managing a portfolio and its risk.
In hedge funds, a PM may also be responsible for a trading strategy or team.
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