DEFINITION of 'Acceptance Market'

Investment market based on short-term credit instruments. An acceptance is a time draft or bill of exchange that is accepted as payment for goods. A banker's acceptance, for example, is a time draft drawn on and accepted by a bank, which is a common method of financing short-term debts in international trade including import-export transactions.

BREAKING DOWN 'Acceptance Market'

The acceptance market is useful to exporters, who are immediately paid for exports; for importers, who do not need to pay until possession of goods occurs; for the financial institutions, that are able to profit from the acceptances; and for investors who trade acceptances in the secondary market. Acceptances are sold in the secondary market at a discount from face value (similar to the Treasury Bill market), at published acceptance rates.

RELATED TERMS
  1. Acceptance

    A contractual agreement on a time draft or sight draft to pay ...
  2. Banker's Acceptance - BA

    A short-term debt instrument issued by a firm that is guaranteed ...
  3. Two Name Paper

    A nickname assigned to trade paper. Both Trade Acceptances and ...
  4. Bank Draft

    A type of check where the payment is guaranteed to be available ...
  5. Bank Endorsement

    An endorsement by a bank for a negotiable instrument, such as ...
  6. Accepting Risk

    A risk management method used in the business or investment field. ...
Related Articles
  1. Personal Finance

    Banker's Acceptance 101

    A banker's acceptance, a common way of financing international trade activity, provides a relatively safe, short-term vehicle for investors. An acceptance is a negotiable time draft that a bank ...
  2. Personal Finance

    What's a Bank Draft?

    A bank draft is a type of check. The bank guarantees payment, making it a more attractive option for the check recipient.
  3. Tech

    Top 5 US Cities That Accept Bitcoin

    Discover why bitcoins are a popular form of payment among many consumers, and learn the top five cities in the United States that accept this currency.
  4. Investing

    GAAP

    Learn more about the generally accepted accounting principles, standards and procedures that companies use to compile their financial statements.
  5. Trading

    Why U.S. Dollars Are Accepted in Bermuda

    The island's proximity to the United States, its popularity with U.S. tourists and the presence of multinational companies contribute to making the U.S. dollar the preferred currency in Bermuda. ...
  6. Investing

    Financial Markets: Capital vs. Money Markets

    Financial instruments with high liquidity and short maturities trade in money markets. Long-term assets trade in the capital markets.
  7. Investing

    Bill of Exchange

    A bill of exchange is a document used in international trade to pay for goods or services. It is signed by the person promising to pay, and given to the person entitled to receive the money. ...
  8. Investing

    What is Debt Financing?

    When a company needs to pay for something, it can pay with cash, or it may finance the purchase. Financing means that it gets the money from other businesses or sources, in return for obligations. ...
  9. Investing

    Will the Yuan Become an International Reserve Currency?

    Although still a matter of when, China is likely to reach a significant milestone when the International Monetary Fund decides to include the Chinese yuan in its special drawing rights basket ...
RELATED FAQS
  1. Why is marketing important to a company in the utilities sector?

    Find out what a banker's acceptance is, how it works, and why it should be considered a safe and liquid money market instrument. Read Answer >>
  2. How can I look up average banker's acceptance yields?

    Discover what a banker's acceptance note is, how it is commonly used, and where investors can find information on available ... Read Answer >>
  3. How can I cancel a bank draft that I have purchased?

    Learn about what a bank draft is and how it works, the circumstances under which a bank draft may be cancelled, and what ... Read Answer >>
  4. Who uses bills of exchange?

    Find out who uses bills of exchange, why they are important in international trade and what happens when a bill is traded ... Read Answer >>
Hot Definitions
  1. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  2. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  3. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
  4. Run Rate

    1. How the financial performance of a company would look if you were to extrapolate current results out over a certain period ...
  5. Hard Fork

    A hard fork (or sometimes hardfork) is a radical change to the protocol that makes previously invalid blocks/transactions ...
  6. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
Trading Center