Financial markets industry participants Flashcards
What are Investments Banks?
Investment banks provide advice and arrange finance for companies that want to float on the stock market, raise additional finance by issuing further stocks or bonds, or carry out mergers and acquisitions.
An investment banking group provides what services?
1) Finance raising and advisory work.
2) Securities-trading in equities, bonds and derivatives and provision of broking and distribution facilities.
3) Treasury dealing for corporate clients in currencies, including ‘financial engineering’ services to protect them from interest rate and exchange rate fluctuations.
4) Investment management for sizeable investors, such as corporate pension funds, charities and very wealthy private clients. In the larger investment banks, the value of funds under management runs into many billions of dollars.
What are custodian banks?
Specialise in safe custody services, looking after portfolios of shares and bonds on behalf of others, such as fund managers, pension funds and insurance companies.
List some custodian bank activities.
1) Holding assets in safekeeping, such as equities and bonds
2) Arranging settlement of any purchases and sales of securities.
3) Asset servicing - collecting incomes from assets, namely dividends in the case of equities and interest in the case of bonds, and corporate actions.
4) Providing information on the underlying companies and and their annual general meetings.
5) Managing cash transactions
6) Performing foreign exchange transactions when required.
7) Providing reporting on all activities that affect the holdings portfolio, including all trades, corporate actions and other transactions.
Who are the biggest custodian banks?
1) The bank of New York Mellon
2) State street
3) JPMorgan Chase
4) Northern trust
What are retail and commercial banks?
Provide services such as taking deposits from, and lending funds to, retails customers, as well as providing payment and money transmission services.
What are Savings institutions?
Saving institutions specialise in offering savings products, to retail customers, but now tend to offer a similar range of services to those offered by banks. They are known as Building Societies.
What is peer-to-peer and crowdfunding?
P2P cuts out banks, so borrowers receive lower rates, while savers get far improved. headline rates, with the P2P firm themselves profiting via a fee.
What are insurance companies?
Key function in financial services allows risk to managed effectively. They collect premiums for the coverage period. The premium is invested in equities and bonds and as a result they are major investors in these markets.
What are retirement schemes?
Large, long term investors in shares, bonds and cash for meeting the aim of providing for retirement.
What are fund managers?
Fund managers run the portfolios of investments for others. They buy and sell shares, bonds and other assets in order to increase the value of their clients portfolio. They charge their clients for the management service.
What are stock brokers and wealth managers?
Stock brokers arrange stock market trades on behalf of their clients. They may advise investors about what to buy or may just offer execution-only services.
What are the 4 main categories of stockbrokers?
1) Execution only
2) Robo advisers - algorithm based portfolio management advice.
3) Advisory and discretionary managers - either advice or ally managed service.
4) Institutional brokers - Stockbrokers who arrange teases on behalf of large institutions.
What are private banks?
They provide services to their clients which include wealth management, estate planning, tax planning, insurance, lending and lines of credit. Their services are normally targeted at high net worth clients.
