Capital markets describes the financial markets where debt (money) or equity securities (shares in a company) are traded.
A capital markets lawyer will work on transactions that involve the issue of debt or equity securities to the public or to a group of investors.
Equity Capital Markets - this is where private companies will list themselves on a stock market and sell their shares - this is known as a 'flotation' or 'IPO (Initial Public Offering)' which means a company's stock can be bought and sold by investors. This turns the private company into a public one.
Generally the Equity Capital Market is the trading of shares in public companies. Selling shares provides the company issuing the shares (sometimes referred to as the 'Issuer') with money (as people have to pay for those shares) and in return, the 'shareholders' (i.e. the people that have bought the shares) receive a return by way of dividend payments (that's a proportion of profits the company makes).
Debt Capital Markets - this is where borrowers (also known as 'Issuers' in this context) raise money by selling debt obligations (which are tradable loans) to investors. These tradable loans are known as 'bonds' and the investor (i.e. the person/company that buys the debt) becomes the owner of the bond. The investor, as the bond owner, will receive interest payments from the borrower/issuer and will receive the full repayment of the bond from the borrower when the bond 'matures' (i.e. comes to an end).
Typical tasks of a capital markets lawyer
Lawyers will assist clients with the regulation of trading debts and the creation of the debt/equity product.
Typically a capital markets lawyer will:
conduct due diligence reviews on the issuer of the securities (i.e. the organisation that is issuing the debt or equity on the market)
drafting the prospectus (this is the 'selling document') and other disclosure documents that describe the issuer and its securities to potential investors
negotiate agreements between the issuer and its advisers
advise clients on the regulatory issues (based on whether they are public or privately traded)
assisting with obtaining consents required in the process from third parties such as regulators, listing agencies and rating agencies