Here is a conceptual example of how a bond trade works:
1. Big Company Ltd wants to acquire Small Company Inc for $1,000,000 but needs to raise capital to do so.
2. Big Company Ltd issues bonds to investors, effectively borrowing $1,000,000.
3. Investors purchase the bonds, providing Big Company Ltd with the $1,000,000 needed for the acquisition.
4. Big Company Ltd now owns Small Company Inc.
5. Big Company Ltd makes regular coupon payments to investors over the 10 year term of the bond. At maturity, Big Company Ltd repays the $1,000,000 principal amount to the investors.
In this way
Northern Trust provides comprehensive wealth management solutions including financial planning, investment management, private and commercial banking, trust and estate services, and philanthropic services. They work with clients to evaluate their needs, help grow and manage assets, and preserve and transfer wealth through retirement planning, risk management, tax strategies, asset custody, lending, and wealth transfer planning. For more information, contact Kristen Andreasen.
This document summarizes the history, services, clients, and commitment of InvestorsBank. It has been in business since 1980, serves entrepreneurs and small businesses across five counties in Wisconsin, and offers a range of banking products and services. The bank prides itself on understanding entrepreneurs' unique needs and providing strategic, customized advice through a team approach. Its commitment is to stand by clients in both good times and bad.
Interlace is an IT solutions provider that has developed a suite of enterprise banking products and solutions. The solutions address challenges in the banking/financial services industry from changing regulations and compliance laws to shrinking budgets and security concerns. The modular yet integrated solutions cover areas like universal banking, wealth management, fraud prevention, anti-money laundering, and more. Interlace provides a one-stop shop for IT services and solutions to help banking/financial clients grow their business.
The document discusses several UX megatrends in the financial services industry, including the evolution of new service models to cater to different customer segments. It also covers how UX strategy must be aligned with business strategy and user needs, and the importance of user research, design, and validation in the UX process. Finally, it emphasizes that UX practitioners must think beyond usability to influence user behavior through persuasive and goal-oriented design.
Our approach to segmentation recognises the uniqueness, dynamism and individuality of markets. This is because from our experience, global solutions and ‘one-size-fits-all’ brands have all too often produced less than actionable results for the highly diverse African market place.
Personal Finance On-line: New Models & OpportunitiesJoe Lamantia
Strategic review of emerging on-line personal finance offerings, based on changing consumer perceptions of the value and credibility of traditional finance service providers.
Considers social lending, micro-credit, and peer-to-peer lending, in combination with prediction markets, as a new personal finance ecosystem.
Explores service concepts and describes experience scenarios with the goal of finding opportunities for existing finance providers to engage with new models.
Many small business owners rely on credit cards to finance operations due to their ease of access. However, credit cards come with risks. Small business credit cards offer few advantages over personal cards and lack protections against unfair practices. Business owners should carefully consider interest rates and fees when choosing a card. It may be better in some cases to use a personal card instead.
The document discusses how multinational corporations work with banks, describing the roles of corporate banking, investment banking, client deal teams, and client service teams in onboarding new multinational clients and providing ongoing services. It also outlines how automated processes, business process management, and empowering relationship managers can help banks better serve multinational clients and increase sales.
Northern Trust provides comprehensive wealth management solutions including financial planning, investment management, private and commercial banking, trust and estate services, and philanthropic services. They work with clients to evaluate their needs, help grow and manage assets, and preserve and transfer wealth through retirement planning, risk management, tax strategies, asset custody, lending, and wealth transfer planning. For more information, contact Kristen Andreasen.
This document summarizes the history, services, clients, and commitment of InvestorsBank. It has been in business since 1980, serves entrepreneurs and small businesses across five counties in Wisconsin, and offers a range of banking products and services. The bank prides itself on understanding entrepreneurs' unique needs and providing strategic, customized advice through a team approach. Its commitment is to stand by clients in both good times and bad.
Interlace is an IT solutions provider that has developed a suite of enterprise banking products and solutions. The solutions address challenges in the banking/financial services industry from changing regulations and compliance laws to shrinking budgets and security concerns. The modular yet integrated solutions cover areas like universal banking, wealth management, fraud prevention, anti-money laundering, and more. Interlace provides a one-stop shop for IT services and solutions to help banking/financial clients grow their business.
The document discusses several UX megatrends in the financial services industry, including the evolution of new service models to cater to different customer segments. It also covers how UX strategy must be aligned with business strategy and user needs, and the importance of user research, design, and validation in the UX process. Finally, it emphasizes that UX practitioners must think beyond usability to influence user behavior through persuasive and goal-oriented design.
Our approach to segmentation recognises the uniqueness, dynamism and individuality of markets. This is because from our experience, global solutions and ‘one-size-fits-all’ brands have all too often produced less than actionable results for the highly diverse African market place.
Personal Finance On-line: New Models & OpportunitiesJoe Lamantia
Strategic review of emerging on-line personal finance offerings, based on changing consumer perceptions of the value and credibility of traditional finance service providers.
Considers social lending, micro-credit, and peer-to-peer lending, in combination with prediction markets, as a new personal finance ecosystem.
Explores service concepts and describes experience scenarios with the goal of finding opportunities for existing finance providers to engage with new models.
Many small business owners rely on credit cards to finance operations due to their ease of access. However, credit cards come with risks. Small business credit cards offer few advantages over personal cards and lack protections against unfair practices. Business owners should carefully consider interest rates and fees when choosing a card. It may be better in some cases to use a personal card instead.
The document discusses how multinational corporations work with banks, describing the roles of corporate banking, investment banking, client deal teams, and client service teams in onboarding new multinational clients and providing ongoing services. It also outlines how automated processes, business process management, and empowering relationship managers can help banks better serve multinational clients and increase sales.
Financial education fosters financial stability for individuals, families, and entire communities. The more people know about credit and banking services, the more likely they are to increase savings, buy homes, and improve their financial health and well being.
The AMBCC is offering the Money Smart curriculum with others community partners.
It is our goal to deliver financial education and appropriate financial services to everyone, including individuals who may not have a relationship with an insured depository institution
121010_Mobile Banking & Payments for Emerging Asia Summit 2012_Building scope...spirecorporate
This document discusses approaches to broadening adoption and usage of mobile payments in emerging Asia. It argues that scope and scale are important, as networks gain more value as more users join. Broad adoption requires recruiting across income segments and including those with purchasing power. Getting funds into the system and keeping them there reduces costs. Leveraging existing networks and finding the right partnerships can help scale up new services. Challenges include aligning interests over time between different players and sectors.
For a while, I've had a vision of banking as a web service based upon widgets of functionality. This is becoming vital if banks are to fit into the semantic web. All of this is explained in my blog entry: http://thefinanser.co.uk/fsclub/2009/02/baas-banking-as-a-service-presentation.html.
Throughout the presentation there are links to the relevant entries here that explains it all too. Feel free to send me any comments or thoughts.
And, for lots more on this, have a look at my directory of social finance http://thefinanser.co.uk/fsclub/2009/04/a-directory-of-social-finance.html.
Based on Islamic Finance principles, Conventional Credit Cards are considered as Unpermissible as it doesn’t comply with the Shariah requirement and Interest element is involved. Hence, Islamic Credit Cards were introduced and can be considered as one of the innovative financing products offered by Islamic Financial Institution to meet the demand for interest free credit cards. The slides will provide functions, features and contracts used in Islamic Credit Card.
The document discusses whether Islamic credit cards are permissible in Islam. It provides background on the history of credit cards and how they work. It then examines different Islamic financing structures used for credit cards like tawarruq, ujrah, and bai al inah. It analyzes fatwas on various credit card features like fees, late payments, interest on balances, and currency conversion. While there are differing opinions, some Islamic scholars argue bai al inah makes Islamic credit cards permissible according to the Shafii school of thought by avoiding riba.
121010_Mobile Banking & Payments for Emerging Asia Summit 2012_Introducing Vi...spirecorporate
Visa is introducing mobile payments for developing countries to examine user experience and adoption. The document discusses Visa's history from closed loop networks in the 1950s-60s to open networks today. It also outlines Visa's plans to leverage mobile wallets and prepaid accounts to increase financial inclusion in developing markets while enhancing the consumer payment experience in developed countries.
BPO session featuring DB, JPM, Bank of China and Bank of Tokyo MitsubishiAndré Casterman
The document provides an update on the Bank Payment Obligation (BPO) project led by the ICC Banking Commission. It outlines the objectives of developing BPO rules as a new industry-wide instrument to facilitate electronic matching and payment of international trade transactions. The agenda includes presentations from SWIFT, banks, and technology partners on how BPO can complement existing trade instruments, support supply chain finance, and leverage ISO 20022 standards for structured data exchange. Tentative timelines are provided for drafting and approving BPO rules by 2013.
This document provides an agenda and overview for an ICC briefing on supply chain finance and the Uniform Rules for Bank Payment Obligation (UR BPO). The briefing will update trade bankers on the progress of the UR BPO rules, share next steps ahead of their formal adoption in April 2013, and encourage industry participation. The agenda includes introductions from banking commission representatives, an explanation of the new UR BPO, the ICC BPO project timeline and deliverables, accounting and capital treatment considerations, the corporate need for new open account trade rules, and a BPO case study from BP Chemicals. The ICC Banking Commission is a leading global rulemaking body for the banking industry focused on trade finance rules and guidelines.
This document provides an agenda and overview for a seminar on extending trade business using new ICC and SWIFT standards for supply chain finance. The seminar will discuss SWIFT's innovations in multi-banking trade standards, ICC's new Bank Payment Obligation instrument and benefits for corporates, first BPO case studies and live BPO banks, the corporate perspective on BPO, and how to get started with ICC and ISO 20022 standards. Various speakers will discuss topics including trade volumes increasing to $48.5 trillion by 2025 and the opportunity for banks to expand financing services from traditional letters of credit to the new BPO which enables bank-assisted open account trade.
The Retail Distribution Review (RDR) comes into effect on 31 December 2012 and will lead to significant changes in the financial advice industry. Key aims are to offer consumers fair and transparent fees, clarity on services received, and advice from highly qualified professionals. All advisers must be qualified to a higher minimum level and undergo continual professional development. The changes are intended to boost consumer confidence and professionalism in financial advice.
Focus on mobile money and improved lives of the unbankedMahesh Amarasiri
Mobile commerce has the potential to improve financial inclusion by reaching the 85% of Sri Lankans with mobile phones but who lack access to traditional banking. Telcos are well-positioned to expand into mobile commerce by leveraging their large customer bases. Mobile commerce could include money transfers, bill payments, and basic banking services. Key benefits of a telco-bank partnership include increased loyalty, revenue, and accessibility for reaching untapped markets and the unbanked. Regulatory support, accessibility, reliability, and acceptance are important enablers for expanding mobile commerce in Sri Lanka.
1) Letters of credit, also known as documentary credits, provide a compromise between a seller's desire for prepayment and a buyer's desire for open accounts.
2) Letters of credit work because they are regulated by the ICC and are irrevocable unless stated otherwise, transferring payment risk from the buyer to the buyer's bank.
3) A letter of credit is a written commitment from an importer's bank to pay an exporter upon presentation of stipulated documents, such as invoices and transport documents.
Industry association of rural banks: strategic partner for developing access ...MABSIV
Ms. Ruth Aseron shares how the Rural Bankers Association of the Philippines leads to promote access to microinsurance for low-income clients in the countryside. This was presented during the 7th International Microinsurance Conference in 2011 in Rio de Janeiro, Brazil from Nov 8-10.
The document discusses creating an agile BancAssurance platform and outlines several key points:
1. It identifies the current business drivers for BancAssurance including regulatory changes, customer needs, and opportunities for banks and insurers.
2. It discusses the challenges in deploying BancAssurance including siloed operations, outdated technology, and lack of customer centricity.
3. It argues that technology can enable business agility by integrating systems, providing a holistic view of customers, and improving processes. The presentation provides examples of how an integrated technology platform can support BancAssurance.
4. It concludes by introducing Agile Financial Technologies, an IT company focused on providing B
Relation between Credit card usage and MaterialismVikram Dahiya
The document summarizes research conducted at IIM Rohtak on the influence of materialism on credit card usage. The research explored dimensions like personality, motivation, behavior, and self-perception. Through factor analysis, the researchers identified key factors related to materialism and credit cards like money, materialism, possessions, and social status. The research findings showed significant positive correlations between materialism and credit card usage, and social status and credit card usage/ownership. No significant correlations were found between other factors like money, non-materialism, and possessions. The document provides implications for consumer behavior and suggestions for credit card companies to target materialistic individuals and those seeking higher social status.
The document discusses various banking products and services offered to corporate and retail customers. It describes two main types of banking products - fee based services and fund based services. Fee based services do not require investment from the bank and include services like cash management, foreign exchange, credit ratings, and online bill payments. Fund based services require bank investment through loans and credit facilities for working capital, exports, imports and term lending. Both corporate and retail customers are provided with an array of fee and fund based banking products customized to their needs.
The document provides information about State Bank of India (SBI), the largest bank in India. It discusses SBI's history, products, services, competitors, SWOT analysis, segmentation, targeting, and positioning. Specifically, it notes that SBI was nationalized in 1955 and currently has over 60,000 branches, making it the largest bank in India in terms of assets, branches, deposits, and profits. It provides details on SBI's various banking products and services, as well as an analysis of its strengths, weaknesses, opportunities, and threats. The document also describes how SBI segments and targets different customer groups based on geography, age, income, and occupation.
This document discusses the challenges in SME lending and how SME credit bureaus can help overcome them. It notes that collecting payment data from trade suppliers is particularly challenging for credit bureaus due to the diversity of suppliers and lack of incentives. A case study from South Africa showed that obtaining this data requires significant resources to engage suppliers. The document proposes ideas like expanding legal mandates and stakeholder funding to help credit bureaus better collect the most predictive SME data like payment histories and principal credit records.
The document discusses the evolution of digital technologies and their impact on business models and customer experiences, noting that businesses need to adapt to changing user needs and empowered consumers who now have more control over their banking and financial experiences through online and mobile channels. It also highlights the importance of understanding customer behavior through data to optimize multi-channel experiences and transform customer visits into long-term relationships.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms.
Moodle is an open-source learning platform created by Martin Dougiamas in 2002. It allows users to create online courses with discussion forums, assignments, quizzes and other tools. Some key features include creating and managing courses, adding resources, activities like assignments and forums, grading features, and activity reports. Extended features include conditional activities, messaging, web conferencing integrations, calendar, portfolio, blogs, notes, and RSS feeds. Moodle can be used by any type of organization and has a large community of developers supporting it.
Financial education fosters financial stability for individuals, families, and entire communities. The more people know about credit and banking services, the more likely they are to increase savings, buy homes, and improve their financial health and well being.
The AMBCC is offering the Money Smart curriculum with others community partners.
It is our goal to deliver financial education and appropriate financial services to everyone, including individuals who may not have a relationship with an insured depository institution
121010_Mobile Banking & Payments for Emerging Asia Summit 2012_Building scope...spirecorporate
This document discusses approaches to broadening adoption and usage of mobile payments in emerging Asia. It argues that scope and scale are important, as networks gain more value as more users join. Broad adoption requires recruiting across income segments and including those with purchasing power. Getting funds into the system and keeping them there reduces costs. Leveraging existing networks and finding the right partnerships can help scale up new services. Challenges include aligning interests over time between different players and sectors.
For a while, I've had a vision of banking as a web service based upon widgets of functionality. This is becoming vital if banks are to fit into the semantic web. All of this is explained in my blog entry: http://thefinanser.co.uk/fsclub/2009/02/baas-banking-as-a-service-presentation.html.
Throughout the presentation there are links to the relevant entries here that explains it all too. Feel free to send me any comments or thoughts.
And, for lots more on this, have a look at my directory of social finance http://thefinanser.co.uk/fsclub/2009/04/a-directory-of-social-finance.html.
Based on Islamic Finance principles, Conventional Credit Cards are considered as Unpermissible as it doesn’t comply with the Shariah requirement and Interest element is involved. Hence, Islamic Credit Cards were introduced and can be considered as one of the innovative financing products offered by Islamic Financial Institution to meet the demand for interest free credit cards. The slides will provide functions, features and contracts used in Islamic Credit Card.
The document discusses whether Islamic credit cards are permissible in Islam. It provides background on the history of credit cards and how they work. It then examines different Islamic financing structures used for credit cards like tawarruq, ujrah, and bai al inah. It analyzes fatwas on various credit card features like fees, late payments, interest on balances, and currency conversion. While there are differing opinions, some Islamic scholars argue bai al inah makes Islamic credit cards permissible according to the Shafii school of thought by avoiding riba.
121010_Mobile Banking & Payments for Emerging Asia Summit 2012_Introducing Vi...spirecorporate
Visa is introducing mobile payments for developing countries to examine user experience and adoption. The document discusses Visa's history from closed loop networks in the 1950s-60s to open networks today. It also outlines Visa's plans to leverage mobile wallets and prepaid accounts to increase financial inclusion in developing markets while enhancing the consumer payment experience in developed countries.
BPO session featuring DB, JPM, Bank of China and Bank of Tokyo MitsubishiAndré Casterman
The document provides an update on the Bank Payment Obligation (BPO) project led by the ICC Banking Commission. It outlines the objectives of developing BPO rules as a new industry-wide instrument to facilitate electronic matching and payment of international trade transactions. The agenda includes presentations from SWIFT, banks, and technology partners on how BPO can complement existing trade instruments, support supply chain finance, and leverage ISO 20022 standards for structured data exchange. Tentative timelines are provided for drafting and approving BPO rules by 2013.
This document provides an agenda and overview for an ICC briefing on supply chain finance and the Uniform Rules for Bank Payment Obligation (UR BPO). The briefing will update trade bankers on the progress of the UR BPO rules, share next steps ahead of their formal adoption in April 2013, and encourage industry participation. The agenda includes introductions from banking commission representatives, an explanation of the new UR BPO, the ICC BPO project timeline and deliverables, accounting and capital treatment considerations, the corporate need for new open account trade rules, and a BPO case study from BP Chemicals. The ICC Banking Commission is a leading global rulemaking body for the banking industry focused on trade finance rules and guidelines.
This document provides an agenda and overview for a seminar on extending trade business using new ICC and SWIFT standards for supply chain finance. The seminar will discuss SWIFT's innovations in multi-banking trade standards, ICC's new Bank Payment Obligation instrument and benefits for corporates, first BPO case studies and live BPO banks, the corporate perspective on BPO, and how to get started with ICC and ISO 20022 standards. Various speakers will discuss topics including trade volumes increasing to $48.5 trillion by 2025 and the opportunity for banks to expand financing services from traditional letters of credit to the new BPO which enables bank-assisted open account trade.
The Retail Distribution Review (RDR) comes into effect on 31 December 2012 and will lead to significant changes in the financial advice industry. Key aims are to offer consumers fair and transparent fees, clarity on services received, and advice from highly qualified professionals. All advisers must be qualified to a higher minimum level and undergo continual professional development. The changes are intended to boost consumer confidence and professionalism in financial advice.
Focus on mobile money and improved lives of the unbankedMahesh Amarasiri
Mobile commerce has the potential to improve financial inclusion by reaching the 85% of Sri Lankans with mobile phones but who lack access to traditional banking. Telcos are well-positioned to expand into mobile commerce by leveraging their large customer bases. Mobile commerce could include money transfers, bill payments, and basic banking services. Key benefits of a telco-bank partnership include increased loyalty, revenue, and accessibility for reaching untapped markets and the unbanked. Regulatory support, accessibility, reliability, and acceptance are important enablers for expanding mobile commerce in Sri Lanka.
1) Letters of credit, also known as documentary credits, provide a compromise between a seller's desire for prepayment and a buyer's desire for open accounts.
2) Letters of credit work because they are regulated by the ICC and are irrevocable unless stated otherwise, transferring payment risk from the buyer to the buyer's bank.
3) A letter of credit is a written commitment from an importer's bank to pay an exporter upon presentation of stipulated documents, such as invoices and transport documents.
Industry association of rural banks: strategic partner for developing access ...MABSIV
Ms. Ruth Aseron shares how the Rural Bankers Association of the Philippines leads to promote access to microinsurance for low-income clients in the countryside. This was presented during the 7th International Microinsurance Conference in 2011 in Rio de Janeiro, Brazil from Nov 8-10.
The document discusses creating an agile BancAssurance platform and outlines several key points:
1. It identifies the current business drivers for BancAssurance including regulatory changes, customer needs, and opportunities for banks and insurers.
2. It discusses the challenges in deploying BancAssurance including siloed operations, outdated technology, and lack of customer centricity.
3. It argues that technology can enable business agility by integrating systems, providing a holistic view of customers, and improving processes. The presentation provides examples of how an integrated technology platform can support BancAssurance.
4. It concludes by introducing Agile Financial Technologies, an IT company focused on providing B
Relation between Credit card usage and MaterialismVikram Dahiya
The document summarizes research conducted at IIM Rohtak on the influence of materialism on credit card usage. The research explored dimensions like personality, motivation, behavior, and self-perception. Through factor analysis, the researchers identified key factors related to materialism and credit cards like money, materialism, possessions, and social status. The research findings showed significant positive correlations between materialism and credit card usage, and social status and credit card usage/ownership. No significant correlations were found between other factors like money, non-materialism, and possessions. The document provides implications for consumer behavior and suggestions for credit card companies to target materialistic individuals and those seeking higher social status.
The document discusses various banking products and services offered to corporate and retail customers. It describes two main types of banking products - fee based services and fund based services. Fee based services do not require investment from the bank and include services like cash management, foreign exchange, credit ratings, and online bill payments. Fund based services require bank investment through loans and credit facilities for working capital, exports, imports and term lending. Both corporate and retail customers are provided with an array of fee and fund based banking products customized to their needs.
The document provides information about State Bank of India (SBI), the largest bank in India. It discusses SBI's history, products, services, competitors, SWOT analysis, segmentation, targeting, and positioning. Specifically, it notes that SBI was nationalized in 1955 and currently has over 60,000 branches, making it the largest bank in India in terms of assets, branches, deposits, and profits. It provides details on SBI's various banking products and services, as well as an analysis of its strengths, weaknesses, opportunities, and threats. The document also describes how SBI segments and targets different customer groups based on geography, age, income, and occupation.
This document discusses the challenges in SME lending and how SME credit bureaus can help overcome them. It notes that collecting payment data from trade suppliers is particularly challenging for credit bureaus due to the diversity of suppliers and lack of incentives. A case study from South Africa showed that obtaining this data requires significant resources to engage suppliers. The document proposes ideas like expanding legal mandates and stakeholder funding to help credit bureaus better collect the most predictive SME data like payment histories and principal credit records.
The document discusses the evolution of digital technologies and their impact on business models and customer experiences, noting that businesses need to adapt to changing user needs and empowered consumers who now have more control over their banking and financial experiences through online and mobile channels. It also highlights the importance of understanding customer behavior through data to optimize multi-channel experiences and transform customer visits into long-term relationships.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms.
Moodle is an open-source learning platform created by Martin Dougiamas in 2002. It allows users to create online courses with discussion forums, assignments, quizzes and other tools. Some key features include creating and managing courses, adding resources, activities like assignments and forums, grading features, and activity reports. Extended features include conditional activities, messaging, web conferencing integrations, calendar, portfolio, blogs, notes, and RSS feeds. Moodle can be used by any type of organization and has a large community of developers supporting it.
Thông tư số 64/2013/TT-BTC hướng dẫn thi hành Nghị định số 51/2010/NĐ-CP ngày...phantuan nam
Thông tư số 64/2013/TT-BTC hướng dẫn thi hành Nghị định số 51/2010/NĐ-CP ngày 14/5/2010 của Chính phủ quy định về hoá đơn bán hàng hoá,cung ứng dịch vụ.
Dịch vụ Kế toán Phan Tuấn Nam 0908 599 473
El Rodeo has been operating in Algeciras, Spain since 1957, building and refitting all kinds of vessels. In 2010, it moved to a new facility in Isla Verde with over 22,000 square meters of space. The company provides shipbuilding, repair, and maintenance services for work vessels, tugs, yachts, and catamarans out of its location in the Strait of Gibraltar industrial zone near the ports of Gibraltar, Malaga, and Jerez.
This presentation is an overview of my past professional and academic experience in the banking industry with regards to controlling and finance functions in various divisions from 2008 to 2010.The topics mentioned here all purely based on my experience and knowledge of how the retail banking functions, what are its main activities, tools and techniques and what I learnt from their implementation in day to day working life during my tenure in the retail banking area as an Analyst/Branch officer
SORTIS Group is a Bulgarian financial services firm that provides investment banking, real estate investment management, credit and leasing advisory, and hospitality asset management services. The company has extensive networks of investment funds, strategic investors, and financing institutions to source and structure investment opportunities for its clients. SORTIS Group consists of several subsidiary companies that specialize in different areas of financial services.
The document discusses the financial services industry. It defines financial services as services provided by organizations in the finance industry that deal with money management. These organizations include banks, credit unions, credit card companies, insurance companies, stock brokerages, and investment funds. The financial services industry represents 20% of the US market. It became a more prevalent term in the US after the Gramm-Leach-Bliley Act of the late 1990s allowed different financial service companies to merge. The industry relies heavily on information technology and faces a constantly changing regulatory environment.
Financial services refer to services provided by the finance industry, including banks, credit card companies, insurance companies, brokerages, and investment funds. These institutions offer products and services like loans, insurance, credit cards, investment opportunities, money management, and market information. Financial services play important roles in facilitating economic transactions, mobilizing savings, allocating capital, monitoring managers, and transforming risk. They also help people better manage their finances and make investments.
The document defines merchant banking and outlines its key services. Merchant banking originated in Europe to finance foreign trade and was introduced to India in 1967. It primarily provides financial advice and services to large corporations, engaging in activities like corporate counseling, project financing, portfolio management, and mergers and acquisitions. Unlike commercial banks, merchant banks do not provide regular banking services but instead focus on investment banking activities in primary markets. The document lists major public and private sector as well as foreign merchant banking institutions operating in India.
Brian Moynihan, president of Global Wealth & Investment Management at Bank of America, discusses opportunities for growth. GWIM is a large competitor providing strong returns. The best opportunity is to leverage BofA's large franchise of over 8 million affluent customer relationships. BofA is capturing this opportunity through investments in client managers and advisors, and by deepening relationships through referrals across business lines. There is potential for much more growth by further leveraging the bank's strengths.
The 2005 Annual Report summarizes the merger between Fidelity National Information Services and Certegy to form one of the largest financial institution technology processing companies. The new company, called FIS, has combined annual revenues of $4 billion and provides core banking, payments processing, and risk management services to over 60 countries. FIS is organized into two business segments: Transaction Processing Services and Lender Processing Services. The report discusses FIS' product offerings and leadership positions across various markets.
Beamonte Investments is one of the world’s leading investment and advisory firm. Beamonte Investments seek to create long-term value for its investors, the portfolio companies and the companies it advises. Beamonte Investments provides various financial advisory services, including investment banking advisory, financial and strategic advisory and fund placement services. Beamonte alternative businesses includes the management the private equity funds, real estate funds and credit oriented strategies.
HDFC Bank provides various banking and financial services including retail banking, corporate banking, investment services, insurance, and forex. It has over 1,725 branches across India and serves individual customers, small/medium businesses, and large corporates. The bank offers accounts, loans, cards, investments, trading services, and customized premium banking programs to cater to different customer segments.
The document summarizes the retail banking system in India as presented by Varsha Golekar. It discusses how retail banking has shifted from being credit and risk focused to being more customer centric. It provides an overview of the products, services, and processes involved in retail banking. Specifically, it describes TJSB Sahakari Bank Ltd's centralized retail banking cell and its processing of retail loans. It discusses the key risks in retail banking and the general documents required for loan applications and recovery processes.
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies, stock brokerages, investment funds and some government sponsored enterprises..http://citiwide.com.au/
Kotak Mahindra Bank provides custodial services including safekeeping of securities, processing of corporate actions like dividends and bonuses, foreign exchange services, proxy voting, compliance monitoring, transaction settlement, and customized reporting. As one of India's leading private banks, it has over 30 years of experience in financial services and capital markets. Its custody services are aimed at both domestic and foreign institutional investors investing in Indian debt and equity markets.
MicroStrategy Business Intelligence Solutions for Financial ServicesRK Paleru
The document discusses MicroStrategy and its business intelligence solutions for the financial services industry. It states that MicroStrategy has over 1 million business users at over 3,000 organizations worldwide and that 12 of the 20 top global banks use MicroStrategy. It provides examples of several large banks and financial institutions that use MicroStrategy solutions to analyze transactions, enhance business performance, strengthen customer relationships, and monitor spending habits.
Financial services refer to the economic services provided by the finance industry, including banks, credit card companies, insurance companies, brokerages, and investment funds. There are several types of financial services, including banking services like checking accounts and loans; foreign exchange services like currency exchange and wire transfers; investment services like asset management and hedge funds; and insurance services like brokerage and reinsurance. Financial services play important roles like facilitating transactions in the economy, mobilizing savings and allocating capital, transforming risk, and monitoring managers. They are important because they help people better manage their finances to take control of their money and make better investment decisions by understanding their goals.
The document discusses merchant banking in India. It defines merchant banking as arranging loans for companies and dealing in international finance, stocks, and launching new companies, without providing normal banking services to the public. It notes that merchant banking originated in Italy and France and later spread to the UK and US. In India, merchant banking became popular in 1983-84 and was first initiated by Grindlays Bank in 1969, providing public issue management and financial consulting. The functions of merchant banking include corporate counseling, portfolio management, venture capital financing, mergers and acquisitions, project counseling, and underwriting. SEBI classifies merchant bankers into four categories in India.
The document discusses merchant banking in India. It defines merchant banking as arranging loans for companies and dealing in international finance, stocks, and launching new companies, without providing normal banking services to the public. It notes that merchant banking originated in Italy and France and later spread to the UK and US. In India, merchant banking became popular in 1983-84 and was first initiated by Grindlays Bank in 1969, providing public issue management and financial consulting. The functions of merchant banking include corporate counseling, portfolio management, venture capital financing, mergers and acquisitions, project counseling, and underwriting. SEBI classifies merchant bankers into four categories in India.
Monroe Credit Advisors LLC is a middle market advisory firm that offers clients unparalleled advice in today's turbulent credit markets. They bring extensive experience from over 100 years in lending and capital markets. Their services include advising companies and creditors on capital structure needs, structuring and placing senior and mezzanine debt, advising on debt restructurings, and originating loans for opportunistic lenders. They work with middle market companies, financial institutions, private equity groups, and opportunistic investors.
This document provides an overview of money, banking, and monetary policy. It discusses the barter system and its drawbacks, then defines the primary functions of money as a medium of exchange and measure of value. It also describes different types of money like credit money and different forms of deposits held at commercial banks. The document outlines the roles and functions of commercial banks and the central bank, and explains some monetary policy tools used by central banks like bank rate, open market operations, reserve ratios, and moral suasion.
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A review of the growth of the Israel Genealogy Research Association Database Collection for the last 12 months. Our collection is now passed the 3 million mark and still growing. See which archives have contributed the most. See the different types of records we have, and which years have had records added. You can also see what we have for the future.
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The simplified electron and muon model, Oscillating Spacetime: The Foundation...RitikBhardwaj56
Discover the Simplified Electron and Muon Model: A New Wave-Based Approach to Understanding Particles delves into a groundbreaking theory that presents electrons and muons as rotating soliton waves within oscillating spacetime. Geared towards students, researchers, and science buffs, this book breaks down complex ideas into simple explanations. It covers topics such as electron waves, temporal dynamics, and the implications of this model on particle physics. With clear illustrations and easy-to-follow explanations, readers will gain a new outlook on the universe's fundamental nature.
This presentation includes basic of PCOS their pathology and treatment and also Ayurveda correlation of PCOS and Ayurvedic line of treatment mentioned in classics.
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How to Manage Your Lost Opportunities in Odoo 17 CRMCeline George
Odoo 17 CRM allows us to track why we lose sales opportunities with "Lost Reasons." This helps analyze our sales process and identify areas for improvement. Here's how to configure lost reasons in Odoo 17 CRM
RPMS TEMPLATE FOR SCHOOL YEAR 2023-2024 FOR TEACHER 1 TO TEACHER 3
Banking presentation
1. Objectives
At the end of the session you will be able to
•Explain general banking operation
•Demonstrate general understanding on IB products
• Foreign Exchange
• Securities
• Commodities
• Derivatives
1
2. Why do Banks exist?
• To Provide Financial products and Services
2
3. W are clients
ho
Banks
Deutsche Bank
Citibank
ABN Amro
Corporate
Deutsche Asset Management
Fund Managers
Multinational
Small / Mid size firms
Individuals
High Street Banking (Chase Bank) US Only
High Net Worth Individuals (Millionaires / Billionaires)
3
4. Banking as a Whole
One of the world’s leading
Major provider of financial services
investment banks
including corporate finance, cash Commercial
management, & credit Banking Investment Services provided: Advice on
Comprises of five national business
Bank corporate strategy and structure,
raising and placing capital, making
segments: Middle Market Banking,
markets in financial instruments and
Mid-Corporate Banking, Commercial
offering sophisticated risk
Real Estate, Asset Based Lending
management services
and Commercial Leasing
Retail Treasury and
Financial
Clients Securities
Services Services
Includes Auto Finance,
Global leader in transaction
Consumer Banking, Home
Finance, Insurance and Small
Asset processing and information
Business Banking
and Card services to wholesale clients
wealth Services Three Businesses: Institutional
Provides mutual fund, insurance Management Trust Services, Investor
& home finance and workplace
banking products to consumers Services(WSS) and Treasury
and small businesses Services
Delivers credit card and other related
Provides investment & wealth management
payment products to cardholders and
services to institutional investors, high net
merchant outlets
worth individuals & retail customers
Aims to be the preferred payment card in
Provides personalized advice and solutions to
existing customers wallets and to increase
wealthy individuals
access to new customers
4
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
E.g. E.g.
Savings DP
Current Short Term Long Term Retail Institutional Custodian
Fixed E.g. E.g. E.g. E.g. Merchant
Banking
Overdraft Auto Loan DDs Bank
Guarantee Debenture
Home Loan Lockers Trustees
Trade
Bill Pay Finance
Fund based activities, greater market risk
Fee based activities, lesser market risk
6
7. Role of Banks
Intermediary role between lenders and borrowers
• Lenders – Deposits funds with Banks
• Liability products (Liability for Banks)
• Borrowers – Borrows funds from Banks
• Asset Products (Assets for Banks)
7
8. Different types of Banks
Types of Banks
Central Bank (RBI)
Non Banking Term Financial
Commercial Banks Finance Companies Institutions
(NBFCs)
Public Private Foreign Co- Regional
Sector Sector operative Rural State Finance
E.g. E.g. E.g. Corporations Indian Financial
Banks Banks Institutions
(SFCs)
SBI HDFC Bank Citibank
PNB UTI Bank ABN Amro E.g.
BOB ICICI Bank HSBC IFCI
NABARD
SIDBI
State/Central Private Primary Credit
Societies
8
10. Activities of a Bank
•Accepting deposits from Public
•Lending money to public
•Remittances/Collection Business
•Keeping valuables in safe custody
•Government business
•Acting as trustee
•Treasury services
•Capital Market activity
10
11. Capital Markets Overview
Markets – A place where exchange of goods and services happen
Capital Market
•Place where capital (fund) requirements of the issuers are
met; i.e. Issuers (Corporate, Government, etc) raise funds
•Trades in these markets are for debt, equity securities or
other instruments
•Organized, as they are governed by regulatory bodies
[Securities & Exchange Board of India, RBI]
11
13. Capital Markets intermediaries
Regulator
Underwriters
Merchant Banker / Investment Bank – JPM
Brokers
Exchanges
Custodians
Banks
Depositories
Depositary Participants
R & T Agents
Market Participants
13
14. Capital Markets – Regulators
SEBI – Securities Board of India
SEC – Securities & Exchange commission (USA)
FSA – Financial Services Authority (UK)
14
15. Capital Markets intermediaries
Underwriter
•Who underwrites the issue in case of under-subscription; takes the
stock in its books
Merchant Banker / Investment Bank
•An underwriter or agent for corporations and municipalities issuing
securities
•Maintain broker/dealer operations mostly, maintain markets for
previously issued securities
•Offer advisory services to investors
•Large role in facilitating mergers and acquisitions, private equity
placements and corporate restructuring
•Do not accept deposits from and provide loans to individuals
(Investment Banks, especially)
15
16. Capital Markets intermediaries
Brokers
•An individual or firm that charges a fee or commission for
executing buy and sell orders submitted by an investor.
•The role of a firm when it acts as an agent for a customer and
charges the customer a commission for its services.
Exchanges
•A market in which securities, commodities, options, or futures
are traded.
•Although you will mostly trade stocks through a broker
•NSE, BSE, NYSE, NASDAQ, LSE
16
17. Capital Markets intermediaries
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.
17
18. Capital Markets intermediaries
Depositories
An institution which facilitates the clearing of securities between the
stock exchange & depository participants; holds assets in electronic form
on behalf of ultimate beneficiaries
Depository Participant
Any institution like a bank that maintains the dematerialized
accounts of beneficiaries, provides services of settling securities
traded on the exchange; Agent of Depository
Registrar and Transfer Agents
maintain the records of members (shareholders) for the issuer company
18
19. Capital Markets intermediaries
Market Participants
Various persons / entities that indulge in buying & selling Examples:
•Qualified Institutional Buyers
•Foreign Institutional Investors, Foreign Venture Capital
•Domestic Institutional Investors - Banks, Financial
Institutions, Insurance Companies, Mutual Funds, Venture
Capital
•Non - Institutional - High Net worth Clients (E.g. NRI, HUF, Government &
Private Corporate bodies)
•Retail Individual Investors
19
20. Primary and Secondary Capital Markets
Primary Market
Sell (float) new stocks and bonds to the public for the first
time. In the primary market the security is purchased directly
from the issuer
Secondary Market
Secondary market is where investors trade among
themselves. An investor purchases a security from
another investor rather than the issuer. Auction
market forms a part of this market.
20
21. Banking Treasury Products
Foreign Exchange
• What is an FX trade
• How does it work
• Why are banks in the in the FX Market
21
22. Products: Foreign Exchange
Definition: Buying (or selling) of a currency and paying for it with another at an agreed price
(exchange rate) for settlement on an agreed date
Complete the grid of descriptions using the following words
1. Payment Instructions
2. Receiving / receipt Instructions
3. Currencies
4. 2 Counterparties
5. Broker
6. Value date
7. Booked the right way round
8. Amount
9. Exchange rate
10. Trade Date
22
23. Products: Foreign Exchange
Component Explanation
Currencies Has to be two of these for the exchange to be possible
Amount A numerical figure that shows the value of the trade
Exchange rate The price of one currency expressed in another
The day the trade will settle. i.e. the funds will be debit / credit
Value date
from / to your account
Booked Right Way Round Shows which currency we are paying and receiving.
Broker Helps to arrange a trade on behalf of others
2 Counterparties The entities involved in the trade
Trade Date The day the deal was agreed
Receipt Instructions Where we are receiving our currency to?
Payment Instructions Where are we paying the currency to?
23
24. Different Trades
• Spot trade: Value date = trade date + 2
• Cash trade: value date = trade date
• Tom trade: Value date = trade date +1
• Forward trade: Value date = trade date +
3(or more)
24
25. Products: Foreign Exchange
Example
BMW now need to pay in USD but only have a EURO account
Gear Box Supplier
USA The Solution: Do a Foreign Exchange Trade
Supplies Contact Citibank:
gear
boxes at Want to Buy $5,000,000.
agreed Will pay for it in EURO’s.
price.
BMW JPMorgan will ask what date they want the currency (Value Date)
need to
pay in JPMorgan will advise the Exchange rate. (How much will $5mio cost in EURO)
USD Rate is 1.27 (Euro 1 = $1.27)
Pay USD 5,000,000 to BMW (for Gear Box Supplier)
BMW Citibank
Munich
Pay EURO 3,937,008.
BMW need to import
gearboxes that have
been made in the US.
Cost $5,000,000
25
26. Speculation
Example
Sell GBP 1 M
Microsoft Citibank
USA USA
Rec $1.9 M
sell 1.7M buy Microsoft speculates that GBP price will increase from $1.7 to 1.9
USD
GBP1M in 3 months time
Contact JPMorgan:
Want to Buy GBP 1,000,000.
JPMC 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)
26
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
27
28. Price of a currency
• Factors that affect the price of a currency
-Economic e.g. Interest rate, inflation rate
- Political
• Strong currency
• Weak currency
28
29. WHY FX
• For personal requirement
• For business requirement
• For speculation
29
30. Products: Commodities
Commodities
What are Commodities?
Commodities Categories
Example of a trade
30
31. Products: Commodities
W are Commodities?
hat
Review cards and put them into 4 categories
Put a name to the 4 categories
31
32. Products: Commodities
Banks trade in Commodities just as they do in currencies.
Commodities are split Into 4 groups:
• Energy – e.g. Gas, Oil
• Base Metals – e.g. Copper, Aluminium
• Precious Metals – e.g. Gold, Silver
• Soft Commodities – e.g. Coffee, Sugar, paper
32
33. Products: Commodities
W Precious metals do banks trade in?
hat
XAU Gold
XAG Silver
XPT Platinum
XPD Palladium
(In place of currency codes the chemical elements of the metal are used to identify the metal)
33
34. Products: Commodities
Example:
Watch maker requires gold to manufacture watches
Finds a company selling gold
Agrees how much Gold
Agree on the price
Agree on Delivery
Pay $300,000
SWISS Tony’s
Gold watch JPMorgan
Company Deliver Gold
Want to buy 1,000 oz
Price is $300 per oz
Total Price is $300,000
34
36. Products: Bonds
Bond Trades
What is a Bond?
How does it work?
What role does JPMorgan play?
36
37. Our Products: Bonds
What is a Bond?
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)
37
38. Products: Bonds
Key Terms of a Bond
• Face Value
Nominal Amount
What the Bond is worth when redeemed at maturity
• Coupon
Amount of interest paid to Bond Holder during the life:
(e.g. 5% = 5% of Face Value of investment)
Date for coupon payments. Usually 6 monthly (does depend on terms of issuance)
• Maturity amount is paid back to the investor.
Date the principle
• Issuer the Bond. (Received the money)
Who Issued
Activity: Lets Look at a practical example.
38
39. Products: Bonds
Conceptual Example
Pay $1,000,000
Receives Bond
Bond Issuer
e.g. A Corporation or Makes regular payments (Coupons)
Investor
Government
Bond maturity pay back $1m
39
40. Products: Bonds
Conceptual Example
Pays $1,000,000
Big Company Ltd Investor(s)
Issues Bond(s) to Investors
2. Raising capital: 3. Raising capital: 4.Raising capital:
1. In this example, Big It borrows money An Investor buys the
Big Company Ltd Company A looks to by issuing a BOND. bond. (can be a bank,
want to buy Small borrow money corporation, Individual
Company Inc. etc etc)
In order to do so it
needs to raise
capital.
The purchase price
is $1,000,000 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
40
41. Products: Bonds
Conceptual Example
Paid $1,000,000
Coupon payments
made
every 6 months for
Big Company Ltd Investor(s)
term of bond
10 Year Bond = 20
payments
Pay back principle amount (e.g. $1,000,000) at maturity
Coupons of 5% are paid semi annually
by Big Company to Investors.
Investors hold
the Bond until Maturity
41
42. Products: Bonds
Role of banks in bonds
Example
EURO 5 M EURO 5 M
BMW JPMorgan Bond
BMW JPMorgan Bonds Market
Bonds
Issue Bonds into
the market
Want to start BMW Contact
design and produce JPMorgan and
a new model car appoint them as
Lead Manager on
Bond Issue
Estimate they need Receive
Receive Receive
EURO 5 million to Bonds Bonds
Bonds
do this
JPMorgan Pay BMW
EURO 5 Million and Pay cash Pay cash Pay cash
receive Bonds
They chose to raise
Investors Investors Investors
this capital by
issuing a Bond Bond Buyer Bond Buyer Bond Buyer
42
43. Products: Equities
Equity Trades
What is an Equity trade?
How does it work?
What role does JPMorgan play?
43
44. Products: Equities
Big Company is now
looking to expand its The company decides it It uses a bank to advise how to do this
operation again and will raise the cash by
needs to raise cash in selling shares
order to do this. Will Issue IPO.
Big Company Ltd Bank
44
45. Products: Equities
Bank will:
• Assist with company valuation Advertise the IPO
• Can under-write shares
Potential investors contact
• Advise on timing bank and register their
interest
• Advise on how much of company to sell
Bank Investors
Big Company Ltd
45
48. Products: Equities
How do banks participate in the Equities market?
Client A, wants to They contact JPMorgan
buy shares in Big with the details of their JPMorgan trader
Company Ltd requirements contacts Stock Exchange.
Wants to Buy 500 shares
Client A JPMorgan
(JPMSL)
JPMorgan and Stock
Broker agree price and Stock Exchange
terms through the Stock
Exchange
Current Stock Broker
Shareholder Through Stock Exchange
A price will be JPMorgan will source a
agreed seller of the Shares.
€20 per share
48
49. Products: Equities Activity
What are we looking to confirm?
Share name Big Company Ltd
Number of shares 500
Price of share EURO €20
Buying or Selling Buying Shares
Currency paying EURO
Trade date 13th October 2005
Value date 15th October 2005 (T +2)
Payment details Where to pay shares and cash to
(from both parties)
49
50. Products: Settling through clearing house
Payments: How do they get made?
The trade will then settle across the
BNP Kassenverein Central Depository.
JPMorgan Frankfurt Delivery versus Payment (DVP)
JPMorgan and
Client send
instructions to Before Payment
their Agents.
Share A/C EURO Cash a/c
Details of the Central Depository
trade and when
to settle e.g. Kassenverein
JPMorgan a/c 500 €10,000
Current
Shareholder a/c 500 €10,000
Trades can
settle over a
central
depository After Payment
The Shares are now transferred to
JPMorgan’s a/c within Kassenverein
They will hold shares on behalf of
their client
Current Citibank
Shareholder Frankfurt
Original Big Company Share Holder,
now has €10,000
50
51. Types of Shares
• Ordinary Share – These shares give the investor the right to a dividend, if declared.
Should the company go into liquidation, then holders of this class of share holds the
lowest priority of repayment.
• Deferred Ordinary share- These give shareholders additional voting rights or the right to
higher dividends. Often these shares will not qualify for dividend until a particular date
has been reached or the company profit has reached a pre- determined.
• Golden Shares – These shares are designed to allow the shareholders the right to a
casting vote. In cases of privatization, the government often held golden shares. This
allowed them to have the casting vote if required, as a form of control, during take-over
bids or other serious matters. These shares are normally used in UK.
• Preference Shares – These shares form part of the share capital of the company. They
pay fixed dividend and in the event of liquidation they hold preference
51
53. Products: Derivatives
Derivative Trades
What is a Derivative?
How does it work?
What role does JPMorgan play?
53
54. Products: Derivatives
Definition
A security, such as an Option or Futures contract, whose value depends on the
performance of an underlying product.
Derivative in itself is not a product, it does however rely on an underlying
product for its market value.
For this course we will look at 3 derivative examples
• Futures
• Options
• Single Currency Interest Rate Swap
54
57. Products: Derivatives
Futures
UK Potato • Has crop of potatoes
UK Potato
Farmer
Farmer • Ready to sell in 6 months
What can happen in the 6 months before the potatoes are ready?
• Potato Supplies worldwide except UK could fail
• In 5 months time there is a scare about effect of potatoes on health
• Supply remains stable with no impact on current prices
57
58. Products: Derivatives
Futures
What can happen in the 6 months before the potatoes are ready?
Risks: Controls:
• Crop could fail • Insurance
• Price movement • Agree buyer now at agreed price
(Future trade)
58
59. Products: Derivatives
Futures
UK Potato Agree to sell
Futures Agree to buy
UK Potato Exchang Supermarket
Farmer
Farmer potatoes potatoes Supermarket
e
Farmer enters into a Futures contract
Future Contract
Using the Futures Exchange
Seller: UK Potato Farmer
Finds a buyer for potatoes
Buyer: Supermarket
Product: Grade A Potatoes
Agrees a price
Price: £5 / sack
Agrees a delivery date Quantity: 5,000 Sacks
Delivery: 5th June 2005
Total Price: £25,000
59
60. Products: Derivatives
Futures
June 5th 2005
• Farmer will deliver potatoes to Supermarket through Exchange
• Supermarket will pay Farmer through Exchange
• Farmer has guaranteed income (providing crop doesn’t fail – insurance would cover this)
This agreement means the Farmer has an obligation to deliver
potatoes on this date and Supermarket has an obligation to pay
farmer the agreed price. All this happens via Exchange
60
62. Products: Derivatives
Options
Definition
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.
Let’s look at an FX Option
Page 45-49 in Workbook
62
63. Products: Derivatives
FX Option
Big Company has ordered a
Big Company
Big Company supply of computer
USA What needs to happen
USA components from CRUUK
(Computer R Us UK) To Pay for this order Big
Company will have to do a
Foreign Exchange trade.
Deliver
Have to pay Computer Computer R Us UK will deliver
£1,000,000 Components the computer equipment in 3 They need to buy GBP
in 3 months months time 1,000,000 (to pay CRUUK)
This will cost Big Company Ltd
GBP 1,000,000. in 3 months And pay for it with USD
Computer RRUs UK
Computer Us UK
(CRUUK)
(CRUUK)
Page 45-49 in Workbook
63
64. Products: Derivatives
FX Option
What choices does Big Company Ltd have?
• Buy the £’s via a forward FX trade (arrange today value 3 months)
• Buy the £’s in 3 months – spot trade
(exchange rate unknown until 3 months)
• Do an FX Option
Page 45-49 in Workbook
64
65. Products: Derivatives
FX Option
Big Company Ltd decide to use an FX Option
Why?
• Want to know state of cash flows (now and future)
• FX Option will limit any exchange rate movements
Page 45-49 in Workbook
65
66. Products: Derivatives
FX Option
How does it work?
Big Company
Bought By The FX Option
Big Company Buyer: Big Company
(USA)
(USA) On January 5th 2004 Seller: JPMorgan
FX Option Details
Big Company contact JPMorgan
Call: GBP: 1,000,000
To have this right but not Put: USD: 1,500,000
obligation Big Company Big Company agree to buy an FX
pay JPMorgan a premium Option from JPMorgan. Strike Price 1.5
Expiry Date 5th March 2004
Delivery date 7th March 2004
This Option gives them the right
but NOT the obligation to use this
trade on the delivery date Premium: $5000
JPMorgan
JPMorgan
Page 45-49 in Workbook
66
67. Products: Derivatives
FX Option
Big company now have the right to use [exercise] this trade for settlement on March 7th
What are the key dates?
The FX Option Expiry Date:
Buyer: Big Company
Date that Big Company have to decide whether to exercise the Option
Seller: JPMorgan
Delivery Date:
FX Option Details Date that transfer of funds would occur if Big Company Ltd
exercise this Option
Call: GBP: 1,000,000
Put: USD: 1,500,000
Strike Price 1.5 Other FX Option Components
Expiry Date 5th March 2004
Delivery date 7th March 2004 Call:
Currency that the buyer of the Option would receive
Premium: $5000 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
67
68. Products: Derivatives
FX Option
How do Big company know whether to exercise the Option?
On 5th March
The FX Option
Buyer: Big Company
Seller: JPMorgan • Look at current FX [Spot] rate
FX Option Details
Call: GBP: 1,000,000 • If they used the spot rate (Not the Option Strike rate)
Put: USD: 1,500,000 how much would it cost to buy the £1,000,000?
Strike Price 1.5
Expiry Date 5th March 2004
• Would it be cheaper to use the Spot rate and let the
Delivery date 7th March 2004
Option expire or…
Premium: $5000
• Use the Option because the spot price in market would
cost more in USD.
Lets look at possible choices Big Company Could make
Page 45-49 in Workbook
68
69. Products: Derivatives
FX Option
To buy £1,000,000 on Spot Market
The FX Option 5th March RATE Would Exercise
Buyer: Big Company COST in USD Option
Seller: JPMorgan
If SPOT Rate 1.3 $1,300,000 NO
FX Option Details
Call: GBP: 1,000,000 If SPOT Rate 1.7 $1,700,000 YES
Put: USD: 1,500,000
Strike Price 1.5
Expiry Date 5th March 2004 To Buy £1,000,000. using the FX Option would cost:?
Delivery date 7 March 2004
th
$1,500,000
Premium: $5000
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
69
70. Products: Derivatives
FX Option: To buy £1,000,000
‘In’, ‘At’ or ‘Out Of’ the Money?
$1,700,000 In the Money
Cost
in $1,500,000 At the Money
USD
$1,300,000 Out of the Money
1.3 1.5 1.7
Foreign Exchange Spot Rate
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