When the stock prices show a downward trend , then it becomes risky to keep savings there. Although the stock market is associated with high risks and high returns , many are risk averse and prefer to invest in the more secure money market .
The money market deals with very short term debt securities that mature in less than a year. Since the money market is extremely safe, it yields very low returns unlike the bond market. The money market securities that are issued by the government or financial institutions or large corporations are very liquid. Since the money market securities trade at very high denominations it becomes very difficult for the individual investors to have access to it.
The money market is a type of a dealer market where firms purchase securities in their own account by assuming the risks themselves. Unlike the stock exchanges the money market securities do not operate in exchanges or through brokers. Transactions take place over phone or the electronic system.
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