Financial Markets Features

• Size: Number of securities which are traded on a financial market. The more securities are traded on the wider financial market. So as shown above, financial markets are essentially based on market speculation.
• Depth: The existence of supply and demand curves above and below the equilibrium price that exists at a given time (there are people who would be able to buy at a price above the equilibrium price. And if there is anyone who is willing to sell at a lower price).
• Freedom: There are no barriers to entry or exit from the financial market.
• Flexibility: Prices of financial assets that are traded on a market, to change to a change occurring in the economy.
• Transparency: can obtain information easily. A financial market is more transparent when it is easier to get the information.

The perfect financial market would be one that we find:

• Large numbers of actors involved both the supply side as the demand side. So no one can influence the formation of financial asset prices. (High extent and depth)
• There are no transaction costs or taxes, or interest rate fluctuations or inflation. (High freedom)
• The assets are divisible and indistinguishable. (High flexibility)
• That there is perfect information, that everyone knows the same thing. (Added transparency)