International and domestic markets

In some products, particularly bonds, there is an important distinction between domestic and international markets. In international bond markets, it may not be the case that securities denominated in a particular country's currency are actually traded in that country. Buyers and sellers of securities utilize offshore funds, and the settlement of transactions is usually conducted by an offshore institution. An example might be an issue of euro-denominated corporate bonds which are purchased by investors in Japan, and cleared through an offshore entity. The most common international bond market is the Eurobond market. Notwithstanding the name, Eurobonds are not exclusively issued or traded in Europe; the term is a generic one used for offshore bonds.

Transactions in short-term debt securities and money market deposits may also be conducted offshore.

In a domestic bond market, securities denominated in a particular currency are generally traded largely by investors domiciled in the country of that currency. Settlement procedures are usually specific to that country's financial system. It is not impossible for foreign investors to trade on domestic markets. US Treasury bonds are US domestic bond market instruments, but there are substantial foreign holdings of such bonds. The domicile of a bond issuer is not particularly relevant; a foreign issuer can issue bonds in a domestic market, while a domestic issuer can issue in international markets.