1. Investment banks Flashcards
What is the buy side in IB? Draw structure
Buy side = Asset Management
- PM (Portfolio Managers)
- Analysts/traders
- PR (Private Wealth Managers)
What is the sell side in IB? Draw structure
Includes: IB, Markets, Research
- IB: M&A and Corporate Finance (Capital markets, IPOs, debt finances)
- Markets: stocks, bonds, forex, commodities, etc.
- Research: analysts who produce equity reports & recommend whether to buy, hold, or sell
What is a Chinese Wall?
A virtual information barrier erected between those who have material, non-public information, and those who don’t, to prevent conflicts of interest.
In IB - Chinese wall between Markets and IB
When was the Great Depression? What was the resulting regulation?
1929 - 1933
Glass-Steagal Act
When was the Global Financial Crisis? What was the resulting regulation?
2008 - 2010
Dodd-Frank regulation
What’s the role of investment banks?
- A bridge between large enterprises and investors
- To advise businesses and governments on how to meet their financial challenges and to help them procure financing, whether it be from stock offerings, bond issues, or derivative products.
What is the Glass-Steagall Act?
The Glass-Steagall Act was passed in 1933 and separated investment and commercial banking activities in response to the commercial bank involvement in stock market investment.
This mixing of commercial and investment banking was considered to be too risky and speculative and widely considered to be a culprit that led to the Great Depression.
What is the Dodd-Frank Act?
- The Dodd-Frank Act targeted the sectors of the financial system that were believed to have caused the 2008 financial crisis, including banks, mortgage lenders, and credit rating agencies.
- Established a number of new government agencies tasked with overseeing the various components of the act and, by extension, various aspects of the financial system.
