Chapter 1: Introduction

Question 1

What rights do security vs bondholders have

Answer 1

Right to vote
Bondholders receive equity first in windup

Question 2

What is the issue with Bearer securities? (3)

Answer 2

Difficult for authorities to monitor ownership, easy to money launder
Issuing org has difficulty issuing div/interest payments
Physical security of the certificates is costly

Question 3

Where are many bearer securities held?

Answer 3

CSDs

Question 4

What are examples of securities held in bearer form? (2)

Answer 4

Eurobonds & ADRs

Question 5

What is the Wholesale Sector known as? (2)

Answer 5

Professional Sector or Institutional Sector

Question 6

What is the wholesale sector?

Answer 6

B2B, no individuals

Question 7

What makes up the Wholesale Sector? (8)

Answer 7

Equity markets
Bond markets
Forex
Derivatives
Insurance (reinsurance, captive)
Fund management
IB
Custodial Banking

Question 8

What is the retail sector?

Answer 8

BSC, Businesses serving individuals

Question 9

What makes up the retail sector? (5)

Answer 9

Retail Banking
Insurance
Pensions
Investment Services
FP&A (advice)

Question 10

What is the total market cap?

Answer 10

~$100 trillion

Question 11

What are the largest exchanges? (3)

Answer 11

NYSE (24.3T)
NASDAQ (20T)
SSE, Shanghai (7.2T)

Question 12

Asia Exchanges? (5)

Answer 12

SSE, Shanghai (7.2T)
JPX & TSE, Japan (5.65T)
SZSE, Shenzen (5.21T)
HKEX, Hong Kong (5T)

Question 13

European Exchanges?

Answer 13

Euronext (6.6T)
LSE (3.26T)
FSE, Germany (2.1T)
SIX, Swiss (1.95T)

Question 14

What is rivalling stock exchanges? (2)

Answer 14

MTFs (multilateral trading facility)
ATSs (alternative trading systems)

Question 15

How do off-exchange trading systems work?

Answer 15

Brining together buyers and sellers on one platform

Question 16

What are MTFs and ATSs sometimes known as? (2)

Answer 16

Crossing networks or matching engines

Question 17

What is larger? Equities or Bonds?

Answer 17

Bonds, 113T vs 100T

Question 18

What is the largest market?

Answer 18

FX

Question 19

What market is FX?

Answer 19

OTC
(aside from some futures and options contracts)

Question 20

What do insurance companies do with premiums?

Answer 20

They invest them, which makes them a key player in the markets.

Question 21

What is a fiduciary?

Answer 21

A person/organisation that acts on behalf of others and puts clients interests ahead of their own.

Question 22

Which participant provides services to help clients manage exchange rate risk?

Answer 22

Investment Banking

Question 23

What does CIS stand for?

Answer 23

Collective Investment Scheme