This document provides an overview of banking operations and products. It explains that banks exist to provide financial products and services to corporate and individual clients. It describes various banking business lines including retail banking, commercial banking, investment banking, and treasury services. It also discusses key banking products like foreign exchange, securities, commodities, and derivatives. It provides examples of how foreign exchange, bond, equity, and derivative trades work and the role banks play in facilitating these transactions.
Commercial banking relates to deposit-taking and lending
They provide services to corporate and individual customers
Some commercial banks have investment banking arms e.g. Bank of America Merrill Lynch
Commercial banks make their profits by taking small, short-term, relatively liquid deposits from retail savers and transforming these into larger, longer maturity loans e.g. in the form of business loans and mortgages
An investment bank provides a wide range of specialized services for companies and large investors
These include
Underwriting and advising on securities issues and other forms of capital raising
Advice on mergers and acquisitions and also corporate restructuring
Trading on capital markets
Research and private equity investments
An investment bank trades and invests on its own account
Investment banks deal mainly with corporate customers
Goldman Sachs and Morgan Stanley are the last remaining major Wall Street investment banking businesses
Commercial banks can provide investment banking services
Chapter 3 Financial Instruments Financial Markets and Financial InstitutionsDr. John V. Padua
This document discusses financial instruments, markets, and institutions. It begins by asking key questions about what financial instruments are, how markets work, and why institutions are important. It then defines different types of finance and assets/liabilities. The main sections cover financial instruments, markets, and institutions. For instruments, it defines them, discusses their uses and characteristics, and provides examples. For markets, it defines them and discusses their roles in providing liquidity, information, and risk sharing. It outlines market structure and types. For institutions, it discusses their roles in reducing costs and issuing securities.
This document discusses monetary policy and how the Federal Reserve uses it to manage the economy. It explains that the Fed uses open market operations, buying and selling U.S. treasury bonds, to increase or decrease the money supply. When the Fed buys bonds it injects money into the economy, lowering interest rates to stimulate investment and growth. When it sells bonds it removes money, raising rates but also slowing investment to prevent overheating. The goal is to keep rates and the economy stable over time using this tool to counter shifts in money demand from the private sector.
The document discusses clearing and settlement of securities transactions in India. It describes the roles of the clearing corporation (NSCCL), custodians, clearing banks, and depositories in facilitating the clearing and settlement process. NSCCL determines obligations and guarantees settlement. Custodians and clearing banks interface between members and NSCCL to settle funds and securities. Depositories hold securities and transfer them between members for settlement. The clearing and settlement process involves trade recording, confirmation, obligation determination, and pay-in/pay-out of funds and securities, with T+2 being the standard settlement cycle.
Clearing and settlement involves matching trades, determining obligations, and exchanging securities for cash. It is facilitated by clearing members, clearing banks, depositories, and the clearing corporation. Key risks include counterparty default and liquidity issues. The clearing corporation manages these risks through activities like trade confirmation, multilateral netting to determine obligations, collecting margins, and imposing limits. It acts as the central counterparty to assume default risk and ensure settlement is completed as required by market rules.
The document provides an overview of business finance and financial markets. It discusses that businesses need finance for fixed assets and working capital. Financial markets help mobilize savings from households and channel them to businesses through financial intermediation. There are two major mechanisms for this - banks and financial markets. Financial markets deal in the creation and exchange of financial assets in both the primary market (new issues) and secondary market (existing securities). Money markets deal in short-term funds of less than 1 year, while capital markets deal in long and medium-term funds. The key stock exchanges in India are the National Stock Exchange and Bombay Stock Exchange.
This document provides an overview of money market securities, including Treasury bills, commercial paper, negotiable certificates of deposit, and repurchase agreements. It discusses the key characteristics of each type of security such as typical maturities, minimum denominations, how they are issued and traded, and how yields are estimated. The chapter also examines how these short-term instruments provide liquidity to both issuers and investors.
This document summarizes key concepts related to financial instruments, markets, and institutions. It defines financial instruments as written legal obligations to transfer value from one party to another. It describes how borrowers and lenders interact directly or indirectly through financial intermediaries like banks. It also outlines different types of markets where financial instruments are traded, such as primary vs secondary markets and money vs capital markets. Finally, it discusses the role of various financial institutions as intermediaries, providing services like managing risk, transforming asset maturities, and reducing transactions costs.
Commercial banking relates to deposit-taking and lending
They provide services to corporate and individual customers
Some commercial banks have investment banking arms e.g. Bank of America Merrill Lynch
Commercial banks make their profits by taking small, short-term, relatively liquid deposits from retail savers and transforming these into larger, longer maturity loans e.g. in the form of business loans and mortgages
An investment bank provides a wide range of specialized services for companies and large investors
These include
Underwriting and advising on securities issues and other forms of capital raising
Advice on mergers and acquisitions and also corporate restructuring
Trading on capital markets
Research and private equity investments
An investment bank trades and invests on its own account
Investment banks deal mainly with corporate customers
Goldman Sachs and Morgan Stanley are the last remaining major Wall Street investment banking businesses
Commercial banks can provide investment banking services
Chapter 3 Financial Instruments Financial Markets and Financial InstitutionsDr. John V. Padua
This document discusses financial instruments, markets, and institutions. It begins by asking key questions about what financial instruments are, how markets work, and why institutions are important. It then defines different types of finance and assets/liabilities. The main sections cover financial instruments, markets, and institutions. For instruments, it defines them, discusses their uses and characteristics, and provides examples. For markets, it defines them and discusses their roles in providing liquidity, information, and risk sharing. It outlines market structure and types. For institutions, it discusses their roles in reducing costs and issuing securities.
This document discusses monetary policy and how the Federal Reserve uses it to manage the economy. It explains that the Fed uses open market operations, buying and selling U.S. treasury bonds, to increase or decrease the money supply. When the Fed buys bonds it injects money into the economy, lowering interest rates to stimulate investment and growth. When it sells bonds it removes money, raising rates but also slowing investment to prevent overheating. The goal is to keep rates and the economy stable over time using this tool to counter shifts in money demand from the private sector.
The document discusses clearing and settlement of securities transactions in India. It describes the roles of the clearing corporation (NSCCL), custodians, clearing banks, and depositories in facilitating the clearing and settlement process. NSCCL determines obligations and guarantees settlement. Custodians and clearing banks interface between members and NSCCL to settle funds and securities. Depositories hold securities and transfer them between members for settlement. The clearing and settlement process involves trade recording, confirmation, obligation determination, and pay-in/pay-out of funds and securities, with T+2 being the standard settlement cycle.
Clearing and settlement involves matching trades, determining obligations, and exchanging securities for cash. It is facilitated by clearing members, clearing banks, depositories, and the clearing corporation. Key risks include counterparty default and liquidity issues. The clearing corporation manages these risks through activities like trade confirmation, multilateral netting to determine obligations, collecting margins, and imposing limits. It acts as the central counterparty to assume default risk and ensure settlement is completed as required by market rules.
The document provides an overview of business finance and financial markets. It discusses that businesses need finance for fixed assets and working capital. Financial markets help mobilize savings from households and channel them to businesses through financial intermediation. There are two major mechanisms for this - banks and financial markets. Financial markets deal in the creation and exchange of financial assets in both the primary market (new issues) and secondary market (existing securities). Money markets deal in short-term funds of less than 1 year, while capital markets deal in long and medium-term funds. The key stock exchanges in India are the National Stock Exchange and Bombay Stock Exchange.
This document provides an overview of money market securities, including Treasury bills, commercial paper, negotiable certificates of deposit, and repurchase agreements. It discusses the key characteristics of each type of security such as typical maturities, minimum denominations, how they are issued and traded, and how yields are estimated. The chapter also examines how these short-term instruments provide liquidity to both issuers and investors.
This document summarizes key concepts related to financial instruments, markets, and institutions. It defines financial instruments as written legal obligations to transfer value from one party to another. It describes how borrowers and lenders interact directly or indirectly through financial intermediaries like banks. It also outlines different types of markets where financial instruments are traded, such as primary vs secondary markets and money vs capital markets. Finally, it discusses the role of various financial institutions as intermediaries, providing services like managing risk, transforming asset maturities, and reducing transactions costs.
Trading and settelment in stock exchange..docx1Rajvi Dedhia
Trading, clearing, and settlement are the three main processes involved in buying and selling securities on a stock exchange. Trading involves placing orders and their execution. Clearing determines obligations in terms of funds and securities. Settlement completes the trade so that it is final. Key entities that facilitate these processes include the National Securities Clearing Corporation, clearing members, custodians, clearing banks, and depositories. There are different types of orders that can be placed, such as market orders, limit orders, and those with time constraints on execution.
This document provides an overview of money market securities and their use by financial institutions. It discusses various short-term debt instruments like Treasury bills, commercial paper, negotiable certificates of deposit, repurchase agreements, and bankers' acceptances. These securities generally mature within one year and are used by corporations and governments to obtain short-term funding. Financial institutions use money markets to earn returns on excess funds and maintain liquidity to meet cash needs. The value of these non-interest bearing securities is determined by the present value of future payments using the required rate of return.
The clearing and settlement process involves two main tasks - trade comparison and settlement. Clearing includes all activities from the time a commitment is made for a transaction until it is settled, and involves processes like reporting, risk margining, and netting of trades. Settlement takes place once clearing is complete, where the settlement agency facilitates the exchange of cash for securities between buyers and sellers. Key entities involved in clearing and settlement include clearing members, clearing banks, depositories, and the clearing corporation, which works to manage the risks in the process like counterparty, operational, and third party risks.
The document provides an introduction to the international financial system, outlining how it facilitates the design, sale, and exchange of financial contracts. It discusses how individuals and firms obtain financial resources directly through markets or indirectly through financial institutions. It then surveys the major components of the financial system, including financial instruments, markets, and institutions. Financial instruments such as stocks, bonds, and loans are described in terms of their basic characteristics and uses. The roles and structures of financial markets and institutions are also outlined.
Clearing and settlement on commodity exchangespagi
Commodity markets allow for the trading of raw materials. Commodities are traded on regulated exchanges where they are bought and sold through futures contracts. These contracts help reduce risk through standardization, liquidity, and the clearing house system. The clearing house guarantees all contracts by collecting margin deposits and ensuring the financial settlement of all trades. Exchanges also employ measures like settlement funds, price limits, and warehouse receipts to further mitigate risk in the commodity market.
This document outlines key aspects of money market securities and the money markets. It discusses the main types of money market securities including treasury bills, commercial paper, negotiable certificates of deposit, repurchase agreements, federal funds, and banker's acceptances. It also examines how various financial institutions use money markets and how money market securities are valued based on factors like interest rates, risk, and credit risk. Additionally, it explores the globalization of money markets over time.
Fee based financial services allow institutions to earn income through fees, dividends, and brokerage from specialized operations. Some examples include credit cards which charge interest for short term borrowing, debit cards which allow direct access to bank accounts for purchases and withdrawals, smart cards which store and transact data via an embedded computer chip, automated teller machines which allow customers to access accounts and perform banking without a teller, and safe deposit lockers which provide secure storage of valuables in a bank vault.
Trading has changed from local to global and so have the processes from paper to Online. The result is change in process from T+3 to T+1 and real time trading and settlement of a trade.
This document provides an overview of financial markets and institutions. It discusses the key functions of financial markets in channeling funds from surplus to deficit units. It describes the structure of financial markets, including the distinction between debt and equity markets, primary vs secondary markets, and money vs capital markets. The main instruments traded in these markets are also outlined. The document then discusses the role of financial institutions in providing indirect finance and transforming financial assets. It identifies the main types of financial institutions like depository institutions, contractual savings institutions, and investment intermediaries. Finally, it covers the rationale for regulating financial markets and institutions to increase information and ensure overall financial system stability.
The document describes the life cycle of a trade from execution through settlement. It discusses the key participants in the trading process like brokers, dealers, exchanges. It also covers important stages like trade capture, validation, confirmation and instruction matching that occur between execution and settlement. Maintaining accurate static data is important for straight-through processing throughout the trade life cycle.
This document outlines the key steps in the securities trade life cycle from order origination to settlement. It describes the roles of different departments within a brokerage firm or securities trading organization, including the front office for order origination, middle office for order validation and confirmation, and back office for clearing and settlement. The life cycle involves order entry, execution, reconciliation, confirmation, booking, accounting, cashiering and settlement functions to complete a trade.
This document discusses how stock market transactions occur. It describes how investors place orders with brokers to buy and sell stocks. It also discusses different order types like market orders, limit orders, and stop orders. The document then covers margin trading, short selling, and investing in stock indexes. It explains how trades are executed, including the roles of floor brokers, specialists, and market makers. It also discusses how electronic communication networks and program trading have changed how orders are handled.
Banks are for-profit institutions that earn money through services like savings accounts and loans, while credit unions are non-profit cooperatives owned by members. Savings accounts provide interest income and have an annual percentage rate typically around 1-2%. Compound interest is better than simple interest since it earns interest on both the principal and accumulated interest over time. Certificates of deposit offer higher interest rates than savings accounts but may charge penalties for early withdrawals. Checking accounts allow purchases, payments and cash withdrawals, while overdraft protection can cover purchases made with insufficient funds for a fee. Proper check writing and endorsement procedures help prevent fraud. Maintaining an accurate check register is important for tracking account balances and transactions.
The document discusses the key participants and processes involved in securities clearing, settlement, and custody in Europe. It describes the roles of institutional investors, central banks, broker/dealers, custodians, local agents, clearinghouses, central securities depositories, and international central securities depositories. It then summarizes the settlement value chain and processes for domestic equity, cross-border equity, and eurobond transactions. Clearing involves calculating obligations, settlement is the exchange of securities for payment, and custody involves safekeeping of assets. Cross-border transactions typically involve more intermediaries and incur additional costs compared to domestic transactions.
National Securities Clearing Corporation Limited (NSCCL) acts as the clearing and settlement agency for all derivatives trades on the NSE. As the central counterparty, NSCCL guarantees settlement and assumes the role of buyer and seller. Clearing members facilitate the clearing and settlement process, computing obligations, performing actual settlement between parties, and managing risk through position limits and margin requirements. The clearing mechanism involves daily mark-to-market settlements for futures and premium settlements for options to reconcile profits and losses between counterparties.
The document provides an overview of various topics in banking including:
1. It introduces retail banking, corporate banking, investment banking and private banking and the various services offered under each.
2. It discusses key banking terminology like CASA (current and savings accounts), time deposits, loans, remittances and non-branch delivery channels.
3. It covers banking principles, regulations, accounting practices, lending, types of accounts, and legal and regulatory aspects of banking.
The document discusses the benefits of a depository system for securities such as reducing risks of lost or fake certificates, expediting transfers and settlements, and facilitating dematerialization of physical shares. It explains the roles of various entities in a depository system like depositories, depository participants, registrars and investors. The document also outlines the benefits of a depository system for investors, issuers and the overall growth and liquidity of capital markets.
The document discusses different aspects of monetary systems including:
1) It defines money and lists its key properties and functions such as being a medium of exchange, store of value, and unit of account.
2) It outlines different types of money including commodity money, convertible paper money, inconvertible paper money, bank deposits, and electronic money.
3) It explores the demand for money and identifies three motives for holding money: transactions demand, precautionary demand, and speculative demand. Interest rates are a major factor in determining the amount of money people hold.
The document provides an overview of the monetary system, including:
1) It defines money as a medium of exchange used to purchase goods and services, as officially issued coins, notes, and currency.
2) It outlines the three main functions of money: as a medium of exchange, a unit of account, and a store of value.
3) It describes the different kinds of money like metallic, paper, and private bank money as well as types like commodity, fiat, and fiduciary money.
This document discusses financial markets and institutions. It begins by outlining the capital allocation process and defining direct and indirect financing. It then discusses various segments of financial markets, including money markets and capital markets. The document outlines what financial markets are, why they are important to study, and their key functions. It also defines different types of financial markets and instruments traded within them, such as money market securities, capital market securities, bonds, mortgages, and derivatives. Finally, it discusses financial institutions, defining them and their role in facilitating indirect finance between savers and borrowers.
The document defines finance and financial systems. It discusses the functions of money, different measures of money supply, and the roles of money lending, capital formation, and investment in the financial system. It also describes the evolution of financial systems from more rudimentary to indirect systems, the key components and markets within financial systems, and the functions of financial intermediaries, markets, and instruments.
This document provides an overview of the capital market sector in India. It discusses the role and functions of the primary and secondary capital markets. The primary market involves the initial sale of securities to raise capital, while the secondary market allows subsequent trading of existing securities. Various participants in the capital market are described, including issuers, investors, regulators like SEBI, and intermediaries such as stock brokers, investment bankers, and depository participants. Common stock market indices used in India like the BSE Sensex and NSE Nifty are also outlined.
Trading and settelment in stock exchange..docx1Rajvi Dedhia
Trading, clearing, and settlement are the three main processes involved in buying and selling securities on a stock exchange. Trading involves placing orders and their execution. Clearing determines obligations in terms of funds and securities. Settlement completes the trade so that it is final. Key entities that facilitate these processes include the National Securities Clearing Corporation, clearing members, custodians, clearing banks, and depositories. There are different types of orders that can be placed, such as market orders, limit orders, and those with time constraints on execution.
This document provides an overview of money market securities and their use by financial institutions. It discusses various short-term debt instruments like Treasury bills, commercial paper, negotiable certificates of deposit, repurchase agreements, and bankers' acceptances. These securities generally mature within one year and are used by corporations and governments to obtain short-term funding. Financial institutions use money markets to earn returns on excess funds and maintain liquidity to meet cash needs. The value of these non-interest bearing securities is determined by the present value of future payments using the required rate of return.
The clearing and settlement process involves two main tasks - trade comparison and settlement. Clearing includes all activities from the time a commitment is made for a transaction until it is settled, and involves processes like reporting, risk margining, and netting of trades. Settlement takes place once clearing is complete, where the settlement agency facilitates the exchange of cash for securities between buyers and sellers. Key entities involved in clearing and settlement include clearing members, clearing banks, depositories, and the clearing corporation, which works to manage the risks in the process like counterparty, operational, and third party risks.
The document provides an introduction to the international financial system, outlining how it facilitates the design, sale, and exchange of financial contracts. It discusses how individuals and firms obtain financial resources directly through markets or indirectly through financial institutions. It then surveys the major components of the financial system, including financial instruments, markets, and institutions. Financial instruments such as stocks, bonds, and loans are described in terms of their basic characteristics and uses. The roles and structures of financial markets and institutions are also outlined.
Clearing and settlement on commodity exchangespagi
Commodity markets allow for the trading of raw materials. Commodities are traded on regulated exchanges where they are bought and sold through futures contracts. These contracts help reduce risk through standardization, liquidity, and the clearing house system. The clearing house guarantees all contracts by collecting margin deposits and ensuring the financial settlement of all trades. Exchanges also employ measures like settlement funds, price limits, and warehouse receipts to further mitigate risk in the commodity market.
This document outlines key aspects of money market securities and the money markets. It discusses the main types of money market securities including treasury bills, commercial paper, negotiable certificates of deposit, repurchase agreements, federal funds, and banker's acceptances. It also examines how various financial institutions use money markets and how money market securities are valued based on factors like interest rates, risk, and credit risk. Additionally, it explores the globalization of money markets over time.
Fee based financial services allow institutions to earn income through fees, dividends, and brokerage from specialized operations. Some examples include credit cards which charge interest for short term borrowing, debit cards which allow direct access to bank accounts for purchases and withdrawals, smart cards which store and transact data via an embedded computer chip, automated teller machines which allow customers to access accounts and perform banking without a teller, and safe deposit lockers which provide secure storage of valuables in a bank vault.
Trading has changed from local to global and so have the processes from paper to Online. The result is change in process from T+3 to T+1 and real time trading and settlement of a trade.
This document provides an overview of financial markets and institutions. It discusses the key functions of financial markets in channeling funds from surplus to deficit units. It describes the structure of financial markets, including the distinction between debt and equity markets, primary vs secondary markets, and money vs capital markets. The main instruments traded in these markets are also outlined. The document then discusses the role of financial institutions in providing indirect finance and transforming financial assets. It identifies the main types of financial institutions like depository institutions, contractual savings institutions, and investment intermediaries. Finally, it covers the rationale for regulating financial markets and institutions to increase information and ensure overall financial system stability.
The document describes the life cycle of a trade from execution through settlement. It discusses the key participants in the trading process like brokers, dealers, exchanges. It also covers important stages like trade capture, validation, confirmation and instruction matching that occur between execution and settlement. Maintaining accurate static data is important for straight-through processing throughout the trade life cycle.
This document outlines the key steps in the securities trade life cycle from order origination to settlement. It describes the roles of different departments within a brokerage firm or securities trading organization, including the front office for order origination, middle office for order validation and confirmation, and back office for clearing and settlement. The life cycle involves order entry, execution, reconciliation, confirmation, booking, accounting, cashiering and settlement functions to complete a trade.
This document discusses how stock market transactions occur. It describes how investors place orders with brokers to buy and sell stocks. It also discusses different order types like market orders, limit orders, and stop orders. The document then covers margin trading, short selling, and investing in stock indexes. It explains how trades are executed, including the roles of floor brokers, specialists, and market makers. It also discusses how electronic communication networks and program trading have changed how orders are handled.
Banks are for-profit institutions that earn money through services like savings accounts and loans, while credit unions are non-profit cooperatives owned by members. Savings accounts provide interest income and have an annual percentage rate typically around 1-2%. Compound interest is better than simple interest since it earns interest on both the principal and accumulated interest over time. Certificates of deposit offer higher interest rates than savings accounts but may charge penalties for early withdrawals. Checking accounts allow purchases, payments and cash withdrawals, while overdraft protection can cover purchases made with insufficient funds for a fee. Proper check writing and endorsement procedures help prevent fraud. Maintaining an accurate check register is important for tracking account balances and transactions.
The document discusses the key participants and processes involved in securities clearing, settlement, and custody in Europe. It describes the roles of institutional investors, central banks, broker/dealers, custodians, local agents, clearinghouses, central securities depositories, and international central securities depositories. It then summarizes the settlement value chain and processes for domestic equity, cross-border equity, and eurobond transactions. Clearing involves calculating obligations, settlement is the exchange of securities for payment, and custody involves safekeeping of assets. Cross-border transactions typically involve more intermediaries and incur additional costs compared to domestic transactions.
National Securities Clearing Corporation Limited (NSCCL) acts as the clearing and settlement agency for all derivatives trades on the NSE. As the central counterparty, NSCCL guarantees settlement and assumes the role of buyer and seller. Clearing members facilitate the clearing and settlement process, computing obligations, performing actual settlement between parties, and managing risk through position limits and margin requirements. The clearing mechanism involves daily mark-to-market settlements for futures and premium settlements for options to reconcile profits and losses between counterparties.
The document provides an overview of various topics in banking including:
1. It introduces retail banking, corporate banking, investment banking and private banking and the various services offered under each.
2. It discusses key banking terminology like CASA (current and savings accounts), time deposits, loans, remittances and non-branch delivery channels.
3. It covers banking principles, regulations, accounting practices, lending, types of accounts, and legal and regulatory aspects of banking.
The document discusses the benefits of a depository system for securities such as reducing risks of lost or fake certificates, expediting transfers and settlements, and facilitating dematerialization of physical shares. It explains the roles of various entities in a depository system like depositories, depository participants, registrars and investors. The document also outlines the benefits of a depository system for investors, issuers and the overall growth and liquidity of capital markets.
The document discusses different aspects of monetary systems including:
1) It defines money and lists its key properties and functions such as being a medium of exchange, store of value, and unit of account.
2) It outlines different types of money including commodity money, convertible paper money, inconvertible paper money, bank deposits, and electronic money.
3) It explores the demand for money and identifies three motives for holding money: transactions demand, precautionary demand, and speculative demand. Interest rates are a major factor in determining the amount of money people hold.
The document provides an overview of the monetary system, including:
1) It defines money as a medium of exchange used to purchase goods and services, as officially issued coins, notes, and currency.
2) It outlines the three main functions of money: as a medium of exchange, a unit of account, and a store of value.
3) It describes the different kinds of money like metallic, paper, and private bank money as well as types like commodity, fiat, and fiduciary money.
This document discusses financial markets and institutions. It begins by outlining the capital allocation process and defining direct and indirect financing. It then discusses various segments of financial markets, including money markets and capital markets. The document outlines what financial markets are, why they are important to study, and their key functions. It also defines different types of financial markets and instruments traded within them, such as money market securities, capital market securities, bonds, mortgages, and derivatives. Finally, it discusses financial institutions, defining them and their role in facilitating indirect finance between savers and borrowers.
The document defines finance and financial systems. It discusses the functions of money, different measures of money supply, and the roles of money lending, capital formation, and investment in the financial system. It also describes the evolution of financial systems from more rudimentary to indirect systems, the key components and markets within financial systems, and the functions of financial intermediaries, markets, and instruments.
This document provides an overview of the capital market sector in India. It discusses the role and functions of the primary and secondary capital markets. The primary market involves the initial sale of securities to raise capital, while the secondary market allows subsequent trading of existing securities. Various participants in the capital market are described, including issuers, investors, regulators like SEBI, and intermediaries such as stock brokers, investment bankers, and depository participants. Common stock market indices used in India like the BSE Sensex and NSE Nifty are also outlined.
Introduction To Financial Institution Saguest3e1da1
The document provides an overview of financial markets and institutions. It defines key terms like financial market, security, and the two main types of markets - exchanges and over-the-counter. It also describes the main types of financial institutions like commercial banks, investment banks, and universal banks. Commercial banks' main activities are taking deposits and lending, while investment banks focus on underwriting new issues and secondary market activities. Many large financial institutions today are universal banks that engage in both commercial and investment banking activities.
The document provides an overview of financial markets and institutions. It defines key terms like financial market, security, and exchange-traded and over-the-counter markets. It describes the main types of financial institutions like banks, building societies, and fund managers. Banks are defined and commercial banks are described as taking deposits and lending to individuals and businesses.
The document defines key terms related to financial systems and markets. It explains that a financial system allows the transfer of money between lenders and borrowers and consists of financial institutions, markets, instruments, and services. Financial institutions provide services like acting as intermediaries between lenders and borrowers. Major types include depository institutions like banks, contractual institutions like insurance companies, and investment institutions. Financial markets allow trading of securities and commodities at low costs. They facilitate processes like resource transfer and capital formation. Common financial instruments include cash instruments like stocks and bonds, as well as derivative instruments.
The document provides an overview of financial markets, with a focus on comparing money markets and capital markets. It defines money markets as short-term lending markets for securities like treasury bills and commercial paper, while capital markets deal in longer-term securities like stocks, bonds, and retained earnings. Key differences highlighted include maturity periods (under 1 year for money markets, over 1 year for capital markets), liquidity (higher for money markets), and risk level (lower for money markets). Major institutions involved include central banks, commercial banks, stock exchanges, and non-banking financial institutions.
Financial institutions such as commercial banks, investment banks, insurance companies, pension funds, mutual funds, and credit unions channel savings from individuals and organizations into loans and investments. Regulatory bodies like the Reserve Bank of India and Securities and Exchange Board of India oversee financial markets and institutions in India. Financial markets allow for the trading of assets and facilitate price discovery, liquidity, and the efficient allocation of capital. Returns on assets vary depending on factors like dividends, interest rates, capital gains/losses, and risk.
The financial system of a country consists of financial markets, intermediaries, and instruments that allow the flow of funds from savers to seekers of funds. It promotes investment and economic growth. India's financial system has transitioned from an informal system to a modern organized one with various regulators, organized and non-organized institutions, and financial markets and instruments. The system aims to efficiently allocate resources in the economy.
The document provides an overview of financial markets, including the different types of markets, key players and their roles, and regulatory agencies. It discusses the capital markets, bond markets, foreign exchange markets, derivatives markets, brokerage firms, and various stock market indices. The overview is designed for beginners to provide insight into the structure of financial markets.
The document discusses the financial system and intermediaries. It defines the financial system as comprising financial assets, institutions, and markets that enable financial transactions. There are three main components - financial assets like loans and deposits, financial institutions like banks and mutual funds, and financial markets like money markets and capital markets. Financial intermediaries play an important role by channeling funds from surplus to deficit areas and reducing risks and transaction costs. The main types of intermediaries are depository institutions, contractual savings institutions, and investment intermediaries.
The financial system in India has seen significant changes since independence, facilitating faster economic development. The system links savers and investors through various financial institutions and markets. It provides necessary financial inputs for production through intermediation of funds. The major components of the financial system are banking institutions, non-banking financial institutions, financial markets, and financial instruments. Financial markets include money markets for short-term funds and capital markets for long-term funds. Money markets deal in short-term debt instruments like treasury bills, commercial paper, certificates of deposit, and promissory notes. Capital markets facilitate resource mobilization through primary and secondary markets.
People invest to grow their money over time. The main investment options are bonds, CDs, stocks, and mutual funds. Bonds are loans to companies or governments that pay interest, with levels of risk depending on the bond's rating. CDs are time deposits that pay interest at fixed rates. Stocks represent shares of company ownership that can gain value or pay dividends. Mutual funds pool money from investors to buy a variety of stocks and bonds within one investment. The stock market performance depends on factors like company earnings, news, and the overall economy.
The document provides an overview of the Philippine financial market, including financial institutions and the money and capital markets. It discusses the key functions of financial institutions like banks and non-bank financial intermediaries. It also describes the money market, which facilitates short-term lending and borrowing, and the capital market, which provides medium to long-term financing through debt and equity instruments. The Philippine Stock Exchange is discussed as the main securities market in the Philippines, along with common stock and bond instruments and basic procedures for buying and selling stocks.
This document provides an overview of finance and the financial environment. It defines finance and describes the six principles of finance, which include that money has a time value, higher returns require more risk, diversification reduces risk, markets are efficient, and reputation matters. It also outlines the components of the financial system, including institutions, markets, monetary policymakers, and their functions of accumulating savings, lending, and transferring financial assets. Several career opportunities in finance are also listed.
The document provides an overview of money markets, including characteristics, participants, purposes, risks, and securities. Money markets are used by participants to borrow and lend in the short term, from days to under a year. They facilitate the transfer of short-term funds between entities with excess and deficient funds. Key money market securities include treasury bills, commercial paper, certificates of deposit, and repurchase agreements.
Capital markets are financial markets for long-term debt or equity-backed securities where money is provided for over a year. They channel wealth from savers to long-term investors like companies and governments. Capital markets have a primary market where new securities are sold and a secondary market where existing securities are traded. They mobilize savings, enable capital formation and economic growth, provide investment opportunities, and are regulated to protect investors. Money markets are for assets involved in borrowing and lending of up to one year. They include instruments like certificates of deposit, commercial paper, and repurchase agreements. Both capital and money markets are important for financing trade and industry while managing liquidity and risk.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
The Impact of Generative AI and 4th Industrial RevolutionPaolo Maresca
This infographic explores the transformative power of Generative AI, a key driver of the 4th Industrial Revolution. Discover how Generative AI is revolutionizing industries, accelerating innovation, and shaping the future of work.
An accounting information system (AIS) refers to tools and systems designed for the collection and display of accounting information so accountants and executives can make informed decisions.
South Dakota State University degree offer diploma Transcriptynfqplhm
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Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
A toxic combination of 15 years of low growth, and four decades of high inequality, has left Britain poorer and falling behind its peers. Productivity growth is weak and public investment is low, while wages today are no higher than they were before the financial crisis. Britain needs a new economic strategy to lift itself out of stagnation.
Scotland is in many ways a microcosm of this challenge. It has become a hub for creative industries, is home to several world-class universities and a thriving community of businesses – strengths that need to be harness and leveraged. But it also has high levels of deprivation, with homelessness reaching a record high and nearly half a million people living in very deep poverty last year. Scotland won’t be truly thriving unless it finds ways to ensure that all its inhabitants benefit from growth and investment. This is the central challenge facing policy makers both in Holyrood and Westminster.
What should a new national economic strategy for Scotland include? What would the pursuit of stronger economic growth mean for local, national and UK-wide policy makers? How will economic change affect the jobs we do, the places we live and the businesses we work for? And what are the prospects for cities like Glasgow, and nations like Scotland, in rising to these challenges?
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
3. Who are clients Banks Corporate Individuals Deutsche Bank Citibank ABN Amro Deutsche Asset Management Fund Managers Multinational Small / Mid size firms High Street Banking (Chase Bank) US Only High Net Worth Individuals (Millionaires / Billionaires)
6. Banking and Banking operations Bank is a commercial institution licensed as a receiver of deposits. Banks are mainly concerned with making and receiving payments as well as supplying short-term loans to individuals. Exists to help you make the most of your money Assist you with your monetary requirements and promote savings How do they do it ?? By offering different products and Services Banking Services Deposits Loans Services Capital Market Short Term Long Term Retail Institutional Fund based activities, greater market risk Fee based activities, lesser market risk E.g. Savings Current Fixed E.g. Overdraft E.g. Auto Loan Home Loan E.g. DDs Lockers Bill Pay E.g. Bank Guarantee Trade Finance E.g. DP Custodian Merchant Banking Debenture Trustees
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8. Different types of Banks Types of Banks Central Bank (RBI) Non Banking Finance Companies (NBFCs) Commercial Banks Term Financial Institutions State Finance Corporations (SFCs) Indian Financial Institutions E.g. IFCI NABARD SIDBI Public Sector Private Sector Foreign Co-operative Banks Regional Rural Banks E.g. SBI PNB BOB E.g. HDFC Bank UTI Bank ICICI Bank E.g. Citibank ABN Amro HSBC State/Central Private Primary Credit Societies
14. SEBI – Securities Board of India SEC – Securities & Exchange commission (USA) FSA – Financial Services Authority (UK) Capital Markets – Regulators
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17. Custodian An agent, bank, trust company, or other organization which holds and safeguards an individual's, mutual fund's, or investment company's assets for them. Bank An organization, usually a corporation, chartered by a state or federal government, which does most or all of the following: receives demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes; certifies depositor's checks; and issues drafts and cashier's checks. Capital Markets intermediaries
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23. Products: Foreign Exchange Trade Date Receipt Instructions Payment Instructions 2 Counterparties Broker Booked Right Way Round Value date Exchange rate Amount Currencies Component The day the deal was agreed Where we are receiving our currency to? Where are we paying the currency to? The entities involved in the trade Helps to arrange a trade on behalf of others Shows which currency we are paying and receiving. The day the trade will settle. i.e. the funds will be debit / credit from / to your account The price of one currency expressed in another A numerical figure that shows the value of the trade Has to be two of these for the exchange to be possible Explanation
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25. Products: Foreign Exchange Example BMW Munich Gear Box Supplier USA Citibank Supplies gear boxes at agreed price. BMW need to pay in USD BMW need to import gearboxes that have been made in the US. Cost $5,000,000 BMW now need to pay in USD but only have a EURO account The Solution: Do a Foreign Exchange Trade Contact Citibank: Want to Buy $5,000,000. Will pay for it in EURO’s. JPMorgan will ask what date they want the currency (Value Date) JPMorgan will advise the Exchange rate. (How much will $5mio cost in EURO) Rate is 1.27 (Euro 1 = $1.27) Pay EURO 3,937,008. Pay USD 5,000,000 to BMW (for Gear Box Supplier)
26. Speculation Example JPMC Microsoft USA Microsoft speculates that GBP price will increase from $1.7 to 1.9 in 3 months time Contact JPMorgan: Want to Buy GBP 1,000,000. Will pay for it in JPMorgan will ask what date they want the currency (Value Date) JPMorgan will advise the Exchange rate. (How much will GBP5mio cost in USD) Rate is 1.7 (GBP 1 = $1.7) sell 1.7M USD buy GBP1M Citibank USA Sell GBP 1 M Rec $1.9 M
27. Currencies What currencies do you know? Have a name: Eg United States Dollar, Japanese Yen Have a 3 figure code Eg, USD and JPY
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30. Commodities What are Commodities? Commodities Categories Example of a trade Products: Commodities
31. Products: Commodities What are Commodities? Review cards and put them into 4 categories Put a name to the 4 categories
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33. What Precious metals do banks trade in? XAU XAG XPT XPD Gold Silver Platinum Palladium (In place of currency codes the chemical elements of the metal are used to identify the metal) Products: Commodities
34. Example: SWISS Tony’s Gold watch Company JPMorgan Watch maker requires gold to manufacture watches Finds a company selling gold Agrees how much Gold Agree on the price Agree on Delivery Want to buy 1,000 oz Price is $300 per oz Total Price is $300,000 Deliver Gold Pay $300,000 Products: Commodities
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36. Products: Bonds Bond Trades What is a Bond? How does it work? What role does JPMorgan play?
37. What is a Bond? Our Products: Bonds A certificate of debt (usually interest-bearing) that is issued by a government or corporation in order to raise money The issuer is required to pay a fixed sum annually until maturity and then a fixed sum to repay the principal Effectively it is a loan. The company who receives the money, issues a Bond with terms and conditions stating when they will pay back interest and principle amount to the lender of the money (Investor)
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39. Bond Issuer e.g. A Corporation or Government Investor Receives Bond Products: Bonds Conceptual Example Pay $1,000,000 Makes regular payments (Coupons) Bond maturity pay back $1m
40. Big Company Ltd 2. Raising capital: In this example, Big Company A looks to borrow money 3. Raising capital: It borrows money by issuing a BOND. 4.Raising capital: An Investor buys the bond. (can be a bank, corporation, Individual etc etc) Products: Bonds Conceptual Example Investor(s) 5. End Result Big Company Ltd can now finance its purchase of Small Company Inc and will pay the Investors back. How much depends on the bond (loan) terms. Small Company Inc 1. Big Company Ltd want to buy Small Company Inc. In order to do so it needs to raise capital. The purchase price is $1,000,000 Pays $1,000,000 Issues Bond(s) to Investors
41. Big Company Ltd Investor(s) Investors hold the Bond until Maturity Coupons of 5% are paid semi annually by Big Company to Investors. Products: Bonds Conceptual Example Coupon payments made every 6 months for term of bond 10 Year Bond = 20 payments Pay back principle amount (e.g. $1,000,000) at maturity Paid $1,000,000
42. Role of banks in bonds Products: Bonds BMW Want to start design and produce a new model car Estimate they need EURO 5 million to do this They chose to raise this capital by issuing a Bond BMW Contact JPMorgan and appoint them as Lead Manager on Bond Issue JPMorgan Pay BMW EURO 5 Million and receive Bonds Issue Bonds into the market Investors Bond Buyer Investors Bond Buyer JPMorgan Example EURO 5 M Bonds Bonds EURO 5 M Bond Market Pay cash Pay cash Pay cash Receive Bonds Receive Bonds Receive Bonds Investors Bond Buyer
43. Products: Equities Equity Trades What is an Equity trade? How does it work? What role does JPMorgan play?
44. Products: Equities Big Company Ltd Big Company is now looking to expand its operation again and needs to raise cash in order to do this. The company decides it will raise the cash by selling shares Will Issue IPO. Bank It uses a bank to advise how to do this
48. Products: Equities How do banks participate in the Equities market? Client A Client A, wants to buy shares in Big Company Ltd JPMorgan (JPMSL) They contact JPMorgan with the details of their requirements Stock Exchange JPMorgan trader contacts Stock Exchange. Wants to Buy 500 shares Current Shareholder Stock Broker JPMorgan and Stock Broker agree price and terms through the Stock Exchange Through Stock Exchange JPMorgan will source a seller of the Shares. A price will be agreed € 20 per share
49. Share name Number of shares Price of share Buying or Selling Currency paying Trade date Value date Payment details Products: Equities What are we looking to confirm? Big Company Ltd 500 EURO €20 Buying Shares EURO 13 th October 2005 15 th October 2005 (T +2) Where to pay shares and cash to (from both parties) Activity
50. Products: Settling through clearing house Payments: How do they get made? JPMorgan Current Shareholder BNP Frankfurt Citibank Frankfurt JPMorgan and Client send instructions to their Agents. Details of the trade and when to settle The trade will then settle across the Kassenverein Central Depository. Delivery versus Payment (DVP) € 10,000 € 10,000 500 500 Trades can settle over a central depository Before Payment After Payment The Shares are now transferred to JPMorgan’s a/c within Kassenverein They will hold shares on behalf of their client Original Big Company Share Holder, now has €10,000 Central Depository e.g. Kassenverein Share A/C EURO Cash a/c JPMorgan a/c Current Shareholder a/c
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53. Derivative Trades What is a Derivative? How does it work? What role does JPMorgan play? Products: Derivatives
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55. Futures What is a Future? How does it work? Products: Derivatives
56. Products: Derivatives Futures Definition Standardised exchange-traded contract to buy or sell a commodity at an agreed price for settlement or delivery on an agreed future date How does it work
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59. Products: Derivatives Futures Futures Exchange Supermarket UK Potato Farmer Farmer enters into a Futures contract Using the Futures Exchange Agree to sell potatoes Agree to buy potatoes Finds a buyer for potatoes Agrees a price Agrees a delivery date Seller: UK Potato Farmer Buyer: Supermarket Product: Grade A Potatoes Price: £5 / sack Quantity: 5,000 Sacks Delivery: 5 th June 2005 Total Price: £25,000 Future Contract
62. Products: Derivatives The buyer has the right, but not the obligation to buy or sell the underlying product at an agreed price on an agreed date The buyer pays a premium to the seller have this right . Definition Let’s look at an FX Option Options Page 45-49 in Workbook
63. FX Option Products: Derivatives Big Company USA Computer R Us UK (CRUUK) Big Company has ordered a supply of computer components from CRUUK (Computer R Us UK) Computer R Us UK will deliver the computer equipment in 3 months time This will cost Big Company Ltd GBP 1,000,000. in 3 months What needs to happen To Pay for this order Big Company will have to do a Foreign Exchange trade. They need to buy GBP 1,000,000 (to pay CRUUK) And pay for it with USD Have to pay £1,000,000 Deliver Computer Components in 3 months Page 45-49 in Workbook
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66. FX Option Products: Derivatives How does it work? Buyer: Big Company Seller: JPMorgan FX Option Details Call: GBP: 1,000,000 Put: USD: 1,500,000 Strike Price 1.5 Expiry Date 5 th March 2004 Delivery date 7 th March 2004 Premium: $5000 Big Company (USA) JPMorgan On January 5 th 2004 Big Company contact JPMorgan Big Company agree to buy an FX Option from JPMorgan. This Option gives them the right but NOT the obligation to use this trade on the delivery date The FX Option Bought By To have this right but not obligation Big Company pay JPMorgan a premium Page 45-49 in Workbook
67. FX Option Products: Derivatives Buyer: Big Company Seller: JPMorgan FX Option Details Call: GBP: 1,000,000 Put: USD: 1,500,000 Strike Price 1.5 Expiry Date 5 th March 2004 Delivery date 7 th March 2004 Premium: $5000 Big company now have the right to use [exercise] this trade for settlement on March 7th The FX Option What are the key dates? Expiry Date: Date that Big Company have to decide whether to exercise the Option Delivery Date: Date that transfer of funds would occur if Big Company Ltd exercise this Option Other FX Option Components Call: Currency that the buyer of the Option would receive Put: Currency that the buyer of the Option would sell Strike: Exchange Rate that would be used if Option is exercised Page 45-49 in Workbook
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69. Buyer: Big Company Seller: JPMorgan FX Option Details Call: GBP: 1,000,000 Put: USD: 1,500,000 Strike Price 1.5 Expiry Date 5 th March 2004 Delivery date 7 th March 2004 Premium: $5000 The FX Option Products: Derivatives FX Option RATE Would COST in USD To buy £1,000,000 on Spot Market 1.3 1.7 Exercise Option If SPOT Rate If SPOT Rate $1,300,000 $1,700,000 5 th March To Buy £1,000,000. using the FX Option would cost:? $1,500,000 NO YES Remember: Big Company bought the Option 3 months ago So wouldn’t know what the rates would be today. Buying the Option limits the cost of the Computer purchases to a maximum of $1,500,000. (plus the $5000 premium) Page 45-49 in Workbook
70. ‘ In’, ‘At’ or ‘Out Of’ the Money? Cost in USD Foreign Exchange Spot Rate 1.3 1.5 1.7 $1,700,000 $1,500,000 $1,300,000 Products: Derivatives FX Option: To buy £1,000,000 Out of the Money At the Money In the Money Page 45-49 in Workbook