Participants

Participants in the Financial System

These are key participants in the broader financial system, categorized by their primary function:

Provide advice and arrange finance for companies:
- Floating on the stock market (IPOs).
- Raising additional finance through share or bond issuance.
- Mergers and acquisitions.
Finance-raising and advisory work for governments and companies.

Specialize in safe custody services:
- Holding assets in safekeeping (equities and bonds).
- Arranging settlement of securities purchases and sales.
- Providing information on underlying companies and AGMs.
- Providing regular reporting on portfolio activities (trades, corporate actions, transactions).
Dominated by a few global custodians (often divisions of major banks).
- Examples: Bank of New York Mellon, State Street.
Offer additional services:
- Stock lending.
- Measuring portfolio performance.
- Maximizing returns on surplus cash.

Take deposits from and lend funds to retail customers.
Provide payment and money transmission services.
Operate through physical branches, telephone, and internet-based services.
Often part of "financial conglomerates":
- Offer services in multiple financial sectors (banking, securities, insurance).

Crowdfunding: Funding projects by raising small amounts from a large number of people.
Use the internet to access potential funders.
Types of Crowdfunding:
- Donation-based: Funding based on belief in the cause.
- Debt-based: Investors lend money and receive it back with interest.
- Equity-based: Investors receive equity or shares in the venture.

Collect premiums in exchange for insurance coverage.
Invest premium income in equities and bonds, making them major market investors.
Provide various products to meet different protection needs.

Also known as investment managers, portfolio managers, or asset managers.
Run portfolios of investments for others (institutions, wealthy individuals).
Manage funds for:
- Pension funds, insurance companies.
- Wealthier individuals.
Global asset management industry is vast (trillions of dollars).
Charge clients fees based on:
- A percentage of the fund's value.
- Performance achieved.

Stockbrokers arrange stock market trades for clients.
- Investment institutions, fund managers, or private investors.
Types of Stockbrokers:
- Execution-only brokers: No advice, commission per trade. Aimed at day traders and confident investors.
- Robo-advisers: Online automated portfolio management advice using algorithms.
- Advisory and discretionary wealth managers: Provide tailored advice and management.
- Institutional brokers: Facilitate large trades for large institutions
Institutional brokers' skill lies in executing large trades without significantly impacting share prices.