The term "Equity Cash" refers to a type of trading executed primarily by large financial institutions or investors such as the Philadelphia Stock Exchange (PSE) and the New York Stock Exchange (NYSE) that trade stocks, or equity securities, on major exchanges. These companies trade equities for themselves and on behalf of customers and place trades using firm capital and also place trades for institutional and retail, or individual, investors.

Assume, for example, that Rahul buys 20 million shares of XYZ Institute common stock because the firm’s analysts believe the stock price is increasing over the next week. Rahul invests its own capital and uses computerized trading to place the trade almost instantly. The company hopes to generate a short-term profit and add the profit to firm capital.

Rahul can also place trades for large institutional customers, such as a mutual fund, and for individuals who work with the firm’s financial advisors. For instance, assume that a mutual fund client wants to purchase 10 million shares of IBM Corporation stock. Rahul negotiates a commission amount, and then places the trade using its computerized trading system. On the other hand, if an individual investor wants to buy 100 shares of Bharat Heavy Electricals Limited (BHEL) stock at the market, Rahul places the trades immediately using the same computer system. In both instances, Rahul must place customer trades before placing trades for Rahul firm accounts, and this policy is in place to ensure fair trade executions for clients. If a brokerage firm wants to buy XYZ Institute’s stock using firm capital, but already has customer orders to purchase the same stock, the broker must place client orders first.

The Equity Cash can also be understood as a marketplace for the immediate settlement of transactions involving commodities and securities. In a cash market, the exchange of goods and money between the seller and the buyer takes place in the present, as opposed to the futures market where such an exchange takes place on a specified future date. This type of market is also known as the spot market since transactions are settled on the spot.

Equity Cash can increase each month: Assume a homeowner buys a $100,000 house with 20% down and the house is worth $130,000. In this case, the owner has $20,000 in cash equity in the property and $30,000 in market equity. The owner's cash equity position increases each month, as a portion of the monthly mortgage payment pays down the principal borrowed. Market equity, however, can change at any time because real estate markets and broader economic conditions fluctuate.

Three Important Benefits of Cash Equity Trading:

Investors get secured by receiving equities in digital form in lieu of cash invested in a company.

A trader or an investor can hold equity for any amount of duration.

The risk involved in cash equity trading is relatively much less than in derivatives.