HOW THE MARKET WORKS
When operating in the Fixed Income market, retail investors need to have a clear idea of how it works.
First of all they need to know the difference between the primary (issuance and subscription) and secondary (trading) markets.
They also need to know the difference between buying a Fixed Income asset and retaining it through to maturity and buying and selling in the secondary market. In the first case, the purchaser will receive the exact amount of coupon or interest agreed upon and the exact face value of the bond at the redemption date. In the second case, the sale or purchase will be executed at the price determined by the market at all times. This will usually mean a loss or a gain for the retail investor.
Also, in order to operate, retail investors must use an authorised intermediary, i.e. a member of the market on which they wish to operate. The same is true for the SEND multilateral electronic platform which is especially for retail investors.
In order to work with any of these intermediaries, investors must generally open a securities account and specify the cash account to be used to withdraw or deposit any monies from these transactions. This account does not necessarily have to be held with the chosen intermediary. Depending on the trustworthiness of the investor, the intermediary may accept orders even if there are not sufficient funds in the cash account. However, there must be sufficient funds on the settlement date (basically, the payment date) as the investor must honour the payment. Depending on the assets, settlement usually occurs one or two working days after the transaction date.