# 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. Part of [Glossary Index](/blog/glossary-index) · Next: [Prices, Order Books & Market Data](/blog/glossary-index/glossary-prices-orderbooks-market-data)