The purchase of one security against the sale of another security carried out by the RBI in the secondary market as part of its open market operations is described as switching.

A method of trading whereby merchants bid against one another and where the securities are sold to the highest bidder is known as auctioning.

1. Treasury Bills
(i) Treasury bills are very popular and enjoy a higher degree of liquidity since they are issued by the Government.
(ii) A Treasury bill is nothing but a promissory note issued for a specified period stated there in.
(iii) The Government promises to pay the specified amount mentioned there in to the bearer of the instrument on the due date.
(iv) The period does not exceed a period of one year.
2. Commercial bills
(i) A bill of exchange issued by a commercial organization to raise money for short-term needs.
(ii) These bills are of 30 days, 60 days and 90 days maturity.
(iii) The Commercial Bill is an instrument drawn by seller of goods on a buyer of goods.

The various types of Commercial Bill are as follows:
(i) Demand  bills
(ii) Clean bill and documentary bills
(iii) Inland bills and foreign bills
(iv) Indigenous bills
(v) Accommodation and Supply bills.
         (i) Demand bills: A demand bill is one wherein no specific time of payment is mentioned.
         (ii) Clean bills and documentary bills: Bills that are accompanied by documents of title to goods are called documentary bills. Eg: Railway Receipt and Lorry Receipt.
        (iii) Inland bills and Foreign bills: Bills that are drawn and payable in India on a person who is resident in India are called inland bills. Bills that are drawn outside India and are payable either in India or outside India are called foreign bills.

Features of certificate of deposits are:
(i) Document of title to time deposit
(ii) It is unsecured negotiable instruments.
(iii) It is freely transferable by endorsement and delivery.
(iv) It is issued at discount to face value.
(v) It is repayable on a fixed date without grace days.

Treasury bills are issued to the public and other financial ínstitutíons for rneeting the short-tern financial requirernents of theCentral Governnent. These bills are freely rnarketable and they can be bought and old at any tíme and these bilis are tradable in secondary market as well.
On the basis of periodicity, Treasury bills maybe classified into three. They are:
     (a) 91 days Treasury bills
     (b) 182 days Treasury bills and
     (c) 364 days Treasury bills
(i)Ninety one days Treasury bills are issued at a fixed discount rate of 4 per cent as well as through auctions.
(ii)The RBI holds 91 days and 182 days Treasury bills and they are issued on tap basis throughout the week.
(iii)364 days Treasury Bills do not carry any fixed rate.The discount rate on these bills are quoted in auction by the participants and accepted by the authorities. Such a rate is called cut off rate.

The features of commercial bills are:
(i) Drawer
(ii) Acceptor
(iii) Payee
(iv) Discounter
(v) Endorser
(vi) Assessment
(vii) Maturity
(viii) Credit rating
Types of commercial bills are:
(i) Demand and usance bills:
(a) A demand bill is one wherein no specific time of payment is mentioned.
(b) So, demand bills are payable immediately when they are presented to the drawee.
(ii) Clean bills and documentary bills:
(a) Bills that are accompanied by documents of title to goods are called documentary bills.
(b) Clean bills are drawn without accompanying any document.
(c) Example: Railway receipt and Lorry receipt.
(iii) Inland bills and Foreign bills:
(a) Bills that are drawn and payable in India on a person who is resident in India are called inland bills.
(b) Bills that are drawn outside India and are payable either in India or outside India are called foreign bills.
(iv) Indigeneous bills: The drawing and acceptance of indigenous bills are governed by native custom or usage of trade.
(v) Accommodation and supply bills: Accommodation bills are those which do not arise out of genuine trade of transactions.

 
S.No Features Money Market Capital Market 1. Duration of
funds It is a market for short-term loanable funds for a period of not exceeding one year. It is a market for long-term funds
exceeding period of one year. 2. Deals with
Instruments It deals with instruments like commercial
bills (bills of exchange, treasury bill, commercial papers, etc.) It deals with instruments like shares debentures,government bonds, etc. 3 Money Value Each single money market instrument is of large amount.Each certificate of deposits or commercial paper is for minimum of  ₹ 5 lakhs Each single capital market instrument is of small amount. Each share value is ₹10. Each debenture value is ₹100. 4 Role of major
institutions The central bank and commercial banks are the major institutions in the money market Development banks and Insurance
companies play a dominant role in the
capital market. 5 Risk Low credit and market risk High credit and market risk. 6 Liquidity High liquidity in Money Market Low liquidity in Capital Market