Here are some of the key features of money market instruments:

Borrower - the financial institution or company who, borrows the funds from the investor and issues the instrument, or accepts the deposit.

Pricing - money market instruments are priced according to the concept of simple discount. This means that unlike simple interest where the future value of the investment is determined by adding the interest earned, simple discount starts with the future value and determines how much it should cost today (i.e. its present value) by subtracting a discount amount.

Discount - is expressed as a % p.a. and is applied to the future (or maturity) value to determine the discount amount. This can also be considered the yield on the instrument.

Present value - is the future value minus the discount amount.

Nominal value - is the future value or face value of the instrument which is repaid on maturity usually expressed in $100s, for example, $10,000 or $1 million.

Maturity date - the date of expiry of the loan when the nominal value will be repaid.

Term - the period to the maturity date for example, 31 days, 60 days, 180 days, six months. Money market instruments mature within one year.

Bearer instrument - money market instruments are typically bearer instruments meaning that they can be sold and ownership transferred by mere delivery of the security. See registered securities for comparison.

Yield - rate of return on the investment expressed as a percentage. Yields are quoted on a net redemption basis to two decimal places. Once a trade is complete the yield is converted to a price to be settled at a future date.

Dealing conventions - trading is mostly conducted via telephone negotiation between fixed interest dealers like RIMsec and money market dealers.