slide1
Download
Skip this Video
Download Presentation
Overview

Loading in 2 Seconds...

play fullscreen
1 / 20

Overview - PowerPoint PPT Presentation


  • 114 Views
  • Uploaded on

Overview. In this segment ... Securities Firms and Investment Banks: Activities of securities firms and investment banks Size, structure and composition Balance sheets and recent trends Regulation of securities firms and investment banks Global issues. Securities Firms &Investment Banks.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Overview' - cairo-newton


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
overview
Overview
  • In this segment ... Securities Firms and Investment Banks:
    • Activities of securities firms and investment banks
    • Size, structure and composition
    • Balance sheets and recent trends
    • Regulation of securities firms and investment banks
    • Global issues
securities firms investment banks
Securities Firms &Investment Banks
  • Nature of business:
    • Underwrite securities.
    • Market making.
    • Advising (example: M&A, restructurings).
securities firms investment banks1
Securities Firms &Investment Banks
  • Growth in domestic M&A:
    • Less than $200 billion in 1990.
    • $1.83 trillion in 2000
    • In US: bottomed out at $458 billion in 2002 ($1.2 trillion worldwide)
    • $525 billion 2003 ($535 trillion worldwide)
size structure and composition
Size, Structure and Composition
  • Dramatic increase in number of firms from 1980 to 1987. Decline of 31% following the 1987 crash, to year 2003.
  • 1987: Salomon Brothers held $3.21 billion in capital.
  • 2003: Merrill Lynch held capital of $24.8 billion.
  • Many recent inter-industry mergers (i.e., insurance companies and investment banks).
    • Role of Financial Services Modernization Act, 1999
types and relative sizes of firms
Types and Relative Sizes of Firms
  • National full-line firms are largest.
    • Merrill Lynch, Morgan Stanley
  • National full-line firms specializing in corporate finance are second in size.
    • Goldman Sachs, Salomon Brothers/Smith Barney
  • Remainder of industry:
    • Specialized investment subsidiaries of BHCs.
    • Discount brokers.
    • Regional securities firms (subdivided into large, medium and small).
    • Specialized electronic trading securities firms
key activities
Key Activities
  • Investing
  • Investment banking
    • Activities related to underwriting and distributing new issues of debt and equity.
  • Market making
    • Increasing importance of online trading
  • Trading
    • Position trading, pure arbitrage, risk arbitrage, program trading
key activities continued
Key Activities (continued)
  • Cash management
  • Assisting with M&A
  • Back-office and service functions.
trends
Trends
  • Decline in trading volume and brokerage commissions
    • particularly since crash of 1987, although some recovery since 1992. Record volumes 1995-2000.
  • Declines in market values--and commission income 2001-2002
  • Resurgence in market values and commissions 2003-2004.
trends continued
Trends (continued)
  • Pretax net income over $9 billion per year 1997-2000
  • Pretax profits soared to $21.0 billion in 2000
    • curtailed by economic slowdown and September 11 attacks 2001.
  • 2003 record pre-tax profits of $22.5 billion.
  • Continuing concerns over conflicts of interest and other ethical concerns
    • Soft dollars
    • Analysts’ recommendations to buy or hold collapsing technology stocks
balance sheet
Balance Sheet
  • Key assets:
    • Long positions in securities and commodities.
    • Reverse repurchase agreements.
  • Key liabilities:
    • Repurchase agreements major source of funds.
    • Securities and commodities sold short.
    • Broker call loans from banks
  • Capital levels much lower than levels in banks
regulation
Regulation
  • Primary regulator: SEC
    • Reiterated by National Securities Markets Improvement Act (NSMIA) of 1996.
    • Prior to NSMIA, regulated by SEC and states.
    • Regulate trading activities such as shelf registration
regulation1
Regulation
  • Early 2000s erosion of SEC dominance
    • Increased vigilance by State Attorneys General
    • Spring 2003, $1.4 billion in penalties over investor abuses.
  • Sarbanes-Oxley Act of 2002
    • Independent auditing oversight board under SEC
    • Instigated by Enron, Global Crossings, Tyco, WorldCom
regulation continued
Regulation (continued)
  • Day-to-day regulation: NYSE, NASD
  • October 2003 implementation of provisions of Patriot Act to combat money laundering
    • Scrutiny of individual identities and affiliations with terrorists
investor protection other monitoring
Investor Protection & Other Monitoring
  • Securities Investors Protection Corporation (SIPC).
    • Protection level of $500,000
  • Federal Reserve also has role in overseeing securities firms and investment banks
    • Vulnerability of the financial system
    • Issue of timely settlement raised by Greenspan
web resources
Web Resources
  • For details of regulation of securities firms and investment banks, visit:

SEC: www.sec.gov

NYSE: www.nyse.com

NASD: www.nasd.com

SIPC: www.sipc.org

global issues
Global Issues
  • Global nature of securities firms
    • Demonstrated by recent mergers such as Deutsche Bank/Bankers Trust
    • Dominance of UBS in U.S. mortgage backed securities markets
  • Growth in securities trading and underwriting is a global event
pertinent websites
Pertinent Websites

Federal Reserve: www.federalreserve.gov

NASD: www.nasd.com

NYSE: www.nyse.com

SEC: www.sec.gov

Securities Industry Association: www.sia.com

SIPC: www.sipc.org

The Banker: www.thebanker.com

Thompson Fin. Securities Data: www.tfibcm.com

Wall Street Journal www.wsj.com

ad