INTERNATIONAL INTRODUCTION TO SECURITIES & INVESTMENTS

1.1 The financial services sector provides the link between

organisations needing capital and those with capital available for investment

1.1.2 Within the financial services sector, there are two distinct areas:

wholesale and retail

1.1.2 Wholesale activies

Equity and bond markets, Forex, Derivates, Insurance Markets, Fund Management, IB, Custodian Banking

1.1.2 Retail sector Activies

Retail baking, Insurance, Pensions, Investment services, Financial planning and advice

1.2.1 Equity markets may benefit from potential profits through

capital appreciation and dividends

1.2.1 Participants in equity markets include:

Individual and institutional investors, traders, and market makers

1.2.1 collective actions of these participants determine

share prices

1.2.1 Share price are influenced by

company performance, economic indicators, geopolitical events, and investor sentiment

1.2.1 Equity markets operate on

organised exchanges

1.2.1 Organized exchanges

the New York Stock Exchange (NYSE), NASDAQ in the United States, London Stock Exchange (LSE)

1.2.1 Benchmark indices → Def & Example

S&P 500, Dow Jones Industrial Average (DJIA), or FTSE 100, track the performance of a representative basket of shares

1.2.1 Equity markets serve several functions

capital allocation, price discovery, liquidity provision

1.2.1 Equity markets are subject to

strict regulatory oversight to ensure fair and transparent trading

1.2.1 Regulatory bodies, such as

US Securities and Exchange Commission (SEC) or the Financial Conduct Authority (FCA) in the UK, establish rules and monitor market activities

1.2.1 Rivals to traditional stock exchanges

multi lateral trading facilities (MTFs)

1.2.1 MTF Definiton

systems that bring together multiple parties that are interested in buying and selling financial instruments. Aka crossing networking or matching engines

1.2.2 Bonds Markets Aka _____ are

fixed-income markets), represent the segment of the global financial system where debt instruments are bought and sold

1.2.2 Participants of Bond Markets

Governments, companies and other entities such as supranational agencies

Investors, seeking a combination of income and capital preservation,

1.2.2 Bond Markets are shaped by

nterest rates, economic conditions and credit risk

1.2.2 Regulatory bodies for bond markets

International Capital Market Association (ICMA), play a crucial role in establishing guidelines and overseeing market activities to ensure fairness and transparency

1.2.3 Forex Participants

central banks, commercial banks,

institutional investors, companies and governments.

1.2.3 what do Forex Participants contribute to

liquidity and efficiency of the market.

1.2.3 Forex markets operate in a __& occurs

decentralised manner, with no central exchange.

trading occurs electronically over-the-counter (OTC),

1.2.3 Forex Currencies are traded in

pairs

1.2.3 Forex markets are known for their

high liquidity,

1.2.3 Major currency pairs

EUR/USD, USD/JPY

characterised by significant trading volumes, offer tight bid-ask spreads, reducing transaction costs.

1.2.4 Derivatives markets trade a range of complex products based on ___ & examples

underlying instruments

1.2.4 Most well knows derivates

Futures and options

1.2.4 Derivatives based on these underlying elements are available on:

exchange-traded market and OTC Market

1.2.4 largest of the exchange-traded derivatives markets is

Chicago Mercantile Exchange (CME)

1.2.4 Interest rate derivatives contracts account for

vast majority of outstanding derivatives contracts, mostly through interest rate swaps and foreign exchange derivatives.

1.2.4 2nd & next largest derivates segments

FX derivatives, Equity linked contracts, credit derivatives and commodity contracts

1.2.5 Insurance markets specialise in the management of

personaI risk, corporate risk and protection of life events.

1.2.5 major players who dominate insurance activity

China Life, Allianz and AXA.

1.2.5 Lloyd’s – historically referred to as Lloyd’s of London

not an insurance company, but a marketplace. brings together a range of insurers (traditionally known as ‘names’), each of whom accepts insurance risks as a member of one or more underwriting syndicates

1.2.5 Lloyd’s Individual Members

liable to the full extent of their private wealth to meet their insurance commitments,

1.2.5 Lloys Corporate members

are corporate entities which trade with limited liability.

1.2.5 What is a syndicate at Lloyds

A group of Lloyd's members (names and/or corporate entities) who join together to "write insurance," taking on all or part of an insurance risk.

1.2.5 How do syndicate members make a profit?

If premiums received exceed claims paid out (after admin expenses), each member receives a share of the profits.

1.2.5 What is Lloyd's known for in terms of innovation?

Casualty, property, energy, motor, aviation, marine, and reinsurance — particularly specialist, unusual, and complex risks.

1.2.5 Reissuance Industry

insurers protect themselves by using reinsurance companies.

1.3.1 Investment Banking Services: Finance-raising and advisory work

both for governments and for companies. For corporate clients,

this is normally in connection with new issues of securities to raise capital, as well as giving advice on mergers and acquisitions.

1.3.1 Investment Banking Services: Securities-trading

in equities, bonds and derivatives and the provision of broking and distribution facilities.

1.3.1 Investment Banking Services: Treasury dealing

for corporate clients in currencies, including ‘financial engineering’ services to

protect them from interest rate and exchange rate fluctuations.

1.3.1 Investment Banking Services: Investment management

for sizeable investors, such as corporate pension funds, charities and very

wealthy private clients.

1.3.2 Custodians

banks that specialise in safe custody services, looking after investments such as shares and bonds on behalf of others, such as fund managers, pension funds and insurance companies.

1.3.2 Custodian Activies

Holding assets in safekeeping, Managing cash transactions, Asset servicing, Arranging settlement

1.3.2 The custody business is now dominated by

small number of global custodians.

Bank of New York Mellon (BNY Mellon) and State Street

1.3.3 Retail/Commercial Banks

operate through a network of branches with physical locations, telephone and internet-based services.

1.3.3 Larger retail banks also offer other financial products

investments, pensions and insurance – these banks are known as ‘financial conglomerates’

1.3.3 Competition to traditional banks

‘challenger’ banks – these are smaller banks, specialising in areas underserved by large, traditional banks, deploying modern financial technology with no community branches.

1.3.4 Savings Institutions