An investment advisor is one who manages the investments of others for a fee, typically calculated as a percentage (e.g., 1%) of assets under management on an annual basis. Investment advisors must be registered under either federal or state law depending on the amount of money under management. Common examples of investment advisors include pension fund managers, mutual fund managers, trust fund managers and also individuals granted discretionary authority by private clients to manage their personal investments.
Stock brokers (known as "registered representatives" under federal law) are not necessarily (and often are not) registered investment advisors. The vast majority of stockbrokers simply take orders for sales and purchases of stocks, bonds and other financial instruments and provide financial advice (and recommend sales and purchases) only as an incidental service to their primary brokerage service -- they usually do not have discretion to manage client investments.
In general, under U.S. law, investment advisors owe their clients an ongoing fiduciary duty to exercise their discretion in selecting investments with their clients' best interests in mind. Stock brokers on the other hand, typically do not owe a fiduciary duty to clients beyond the proper execution of buy and sell orders.
80-b-2(11) Definition of Investment Adviser in INVESTMENT ADVISERS ACT OF 1940
(11) “Investment adviser” means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities; but does not include
(A) a bank, or any bank holding company as defined in the Bank Holding Company Act of 1956 [12 U.S.C. 1841 et seq.] which is not an investment company, except that the term “investment adviser” includes any bank or bank holding company to the extent that such bank or bank holding company serves or acts as an investment adviser to a registered investment company, but if, in the case of a bank, such services or actions are performed through a separately identifiable department or division, the department or division, and not the bank itself, shall be deemed to be the investment adviser;
(B) any lawyer, accountant, engineer, or teacher whose performance of such services is solely incidental to the practice of his profession;
(C) any broker or dealer whose performance of such services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor;
(D) the publisher of any bona fide newspaper, news magazine or business or financial publication of general and regular circulation;
(E) any person whose advice, analyses or reports relate to no securities other than securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, or securities issued or guaranteed by corporations in which the United States has a direct or indirect interest which shall have been designated by the Secretary of the Treasury, pursuant to section 3(a)(12) of the Securities Exchange Act of 1934 [15 U.S.C. 78c (a)(12)], as exempted securities for the purposes of that Act [15 U.S.C. 78a et seq.];
(F) any nationally recognized statistical rating organization, as that term is defined in section 3(a)(62) of the Securities Exchange Act of 1934 [15 U.S.C. 78c (a)(62)], unless such organization engages in issuing recommendations as to purchasing, selling, or holding securities or in managing assets, consisting in whole or in part of securities, on behalf of others; or
(G) such other persons not within the intent of this paragraph, as the Commission may designate by rules and regulations or order.
Registration process
http://www.sec.gov/divisions/investment/iard/register.shtml
INVESTMENT ADVISERS ACT OF 1940
http://www4.law.cornell.edu/uscode/15/ch2D.html
PART 275--RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940
http://www.access.gpo.gov/nara/cfr/waisidx_00/17cfr275_00.html
FAQs regarding registration
http://www.sec.gov/divisions/investment/iard/iardfaq.shtml
Showing posts with label Business concept. Show all posts
Showing posts with label Business concept. Show all posts
Friday, September 26, 2008
Sunday, December 2, 2007
Private Equity - Business concept
The Private equity investing is broadly defined as investing in a company through a negotiated process. PE investments can be divided into the two following major categories:
Venture capital: an investment to create a new company, or expand a smaller company that has undeveloped or developing revenues
Buy-out: acquisition of a significant portion or a majority control in a more mature company. The acquisition normally entails a change of ownership
Private equity firms exit from their investments through one of three ways:
an IPO,
a sale or merger of the company,
or a recapitalization.
Leading investment are committing their own capital or principal money to PE investments. Also various sponsors are floating PE funds to attaract funds from HNIs into PE investments.
Most private equity funds require significant initial investment (usually upwards of $1,000,000) plus further investment for the first few years of the fund.
Limited partnership interests is the dominant legal form of private equity investments.
Once invested, money is locked-up in long-term investments which can last for as long as twelve years. Distributions are made only as investments are converted to cash; limited partners typically have no right to demand that sales be made.
If a private equity firm can't find good investment opportunities, it will not draw on an investor's commitment.
The risk of loss of capital is typically higher in venture capital funds, which invest in companies during the earliest phases of their development, and lower in mezzanine capital funds, which provide interim investments to companies which have already proven their viability but have yet to raise money from public markets.
Consistent with the risks outlined above, private equity can provide high returns, with the best private equity managers significantly outperforming the public markets.
The potential benefits of annual returns can range up to 30% for successful funds.
PE Roots
The roots of PE and venture capital are same. In 1946 when the American Research and Development Corporation (ARD) decided to form to encourage private sector institutions to help provide funding for soldiers that were returning from World War II. They had an operating philosophy that was to become significant in the development of both private equity and venture capital: they believed that by providing management with skills and funding, they could encourage companies to succeed and in doing so, make a profit themselves. ARD succeeded in raising approximately $7.4 million, and they did have one rousing success; they funded Digital Equipment Corporation (DEC). By the 1970s such private participation had permeated into the the private enterprise formation, but till in the late 1970s, the task was being largely carried out by investment arms of a few wealthy families, such as the Rockefellers and Whitneys. In the 1980’s, FedEx and Apple were able to grow because of private equity or venture funding, as were Cisco, Genentech, Microsoft, Avis, Beatrice Foods, Dr. Pepper, Gibson Greetings, and McCall Patterns.
Most private equity funds are offered only to institutional investors and individuals of substantial net worth. This is often required by the law as well, since private equity funds are generally less regulated than ordinary mutual funds. For example in the US, most funds require potential investors to qualify as accredited investors, which requires $1 million of net worth, $200,000 of individual income, or $300,000 of joint income (with spouse) for two documented years and an expectation that such income level will continue.
Private Equity Funds: Business Structure and Operations By James M. Schell
Published 1999
Law Journal Press
Gives attorneys, investment professionals, tax practitioners, and corporate lawyers the tools and guidance needed to handle various aspects of a private investment fund. This book covers a range of issues such as the key economic differences between various types of funds; nailing down maximum tax benefits for the sponsor of the fund; and more.
Venture capital: an investment to create a new company, or expand a smaller company that has undeveloped or developing revenues
Buy-out: acquisition of a significant portion or a majority control in a more mature company. The acquisition normally entails a change of ownership
Private equity firms exit from their investments through one of three ways:
an IPO,
a sale or merger of the company,
or a recapitalization.
Leading investment are committing their own capital or principal money to PE investments. Also various sponsors are floating PE funds to attaract funds from HNIs into PE investments.
Most private equity funds require significant initial investment (usually upwards of $1,000,000) plus further investment for the first few years of the fund.
Limited partnership interests is the dominant legal form of private equity investments.
Once invested, money is locked-up in long-term investments which can last for as long as twelve years. Distributions are made only as investments are converted to cash; limited partners typically have no right to demand that sales be made.
If a private equity firm can't find good investment opportunities, it will not draw on an investor's commitment.
The risk of loss of capital is typically higher in venture capital funds, which invest in companies during the earliest phases of their development, and lower in mezzanine capital funds, which provide interim investments to companies which have already proven their viability but have yet to raise money from public markets.
Consistent with the risks outlined above, private equity can provide high returns, with the best private equity managers significantly outperforming the public markets.
The potential benefits of annual returns can range up to 30% for successful funds.
PE Roots
The roots of PE and venture capital are same. In 1946 when the American Research and Development Corporation (ARD) decided to form to encourage private sector institutions to help provide funding for soldiers that were returning from World War II. They had an operating philosophy that was to become significant in the development of both private equity and venture capital: they believed that by providing management with skills and funding, they could encourage companies to succeed and in doing so, make a profit themselves. ARD succeeded in raising approximately $7.4 million, and they did have one rousing success; they funded Digital Equipment Corporation (DEC). By the 1970s such private participation had permeated into the the private enterprise formation, but till in the late 1970s, the task was being largely carried out by investment arms of a few wealthy families, such as the Rockefellers and Whitneys. In the 1980’s, FedEx and Apple were able to grow because of private equity or venture funding, as were Cisco, Genentech, Microsoft, Avis, Beatrice Foods, Dr. Pepper, Gibson Greetings, and McCall Patterns.
Most private equity funds are offered only to institutional investors and individuals of substantial net worth. This is often required by the law as well, since private equity funds are generally less regulated than ordinary mutual funds. For example in the US, most funds require potential investors to qualify as accredited investors, which requires $1 million of net worth, $200,000 of individual income, or $300,000 of joint income (with spouse) for two documented years and an expectation that such income level will continue.
Private Equity Funds: Business Structure and Operations By James M. Schell
Published 1999
Law Journal Press
Gives attorneys, investment professionals, tax practitioners, and corporate lawyers the tools and guidance needed to handle various aspects of a private investment fund. This book covers a range of issues such as the key economic differences between various types of funds; nailing down maximum tax benefits for the sponsor of the fund; and more.
Sunday, November 18, 2007
Sovereign Wealth Management 2007
Sovereign wealth funds offer longer-term investment horizon compared with traditional reserve portfolios, assuming higher tolerance for short-term risk. Therefore, a more diversified and less conservative asset allocation is possible – constructing a more efficient portfolio that could include illiquid asset classes. Illiquid assets should offer meaningful premium over more liquid asset classes, as have been demonstrated by some notable U.S. college endowments. What’s more, compared with traditional reserves management, sovereign wealth funds can be
more active in moving into high-growth markets. This increased level of access into high-growth economies should make noticeable differences in terms of returns over the years.
And this new opportunity set is not small. By the end of 2040, according to Goldman Sachs research, the combined GDP of BRICs and Mexico will be bigger in dollar terms than that of the G7 economies. Sovereign wealth funds may also pursue to diversify the sources of long-term wealth. They may try to optimize their portfolios with respect to characteristics of their national economies, such as seeking strategic ownership positions in important foreign enterprises. For example, one could
choose to invest in strategic resources which the country lacks. And for countries with abundant human capital and manufacturing capabilities but with little resources, it may make sense for them to invest in natural resources to diversify their national portfolios.
Challenges in sovereign wealth management in 2007
First, global financial market conditions may have become less favorable to new investors. Valuations are at or near historic highs, and global liquidity has pushed up prices in all asset sectors, including equities and commodities. Bond yields are now higher after the lows seen in 2005. Credit spreads remain extremely tight.
Though the global economic environment is still benign and solid expansion of the global economy is most likely in coming years – as suggested by the IMF’s latest report, downside risks for financial markets may be increasing, as the cyclical factors contributing to the low volatility environment could reverse. The visibility of financial losses means that the public is more likely to focus on them should they occur, and this could pose serious reputation challenges to newly-established sovereign wealth funds.
Second, there are risk management challenges. Sovereign wealth funds need to have a
different approach to risk from that of traditional reserves management as the fund moves into non-traditional asset classes.
And yet, it is often difficult to find good data with sufficient history for certain asset classes. And analyzing the market behavior of expanded set of asset classes and finding correlations among them are much more difficult. Moreover, the characteristics of the market indices used to represent alternative asset classes change rapidly, further compromising the usefulness of the historical asset class record. Therefore, sovereign wealth funds need to develop a new modeling approach to confidently monitor and control the market risk of their portfolio assets
Third, a well-defined mandate is crucial to successful management of funds. Problems arise when mandates are poorly defined – leading to bitter arguments about its proper uses. And this problem is acute especially in developing countries, where it is tempting to fund government expenditures. In addition, agreement on the risk/return profile of a fund can sometimes be very difficult if there are differences in views on the characteristics of the fund’s future liability.
There is another issue – that is, the potential emergence of so-called ‘financial protectionism’. The relationship with recipient countries could get more complicated when sovereign wealth funds show particular interest in other countries’ highly strategic industries. How they might react is unclear.
Possible expansion of financial protectionism could bring about adverse effects on the still on-going globalization process – one of major factors bringing global prosperity.
Size
The total size of sovereign wealth funds could now be as large as USD 2.5 trillion, according to a recent research by Morgan Stanley. The funds derived from oil and gas export proceeds account for some two thirds of the total, with the rest consisting of funds mainly controlled by the Asian exporters. The sovereign wealth funds are expected to double in size before 2010 and reach USD 10 trillion mark before 2014. It could well surpass the size of the world’s total official reserves in the not-too-distant future, and will have powerful implications on the global financial markets.
One of implications is apparent portfolio shifts from the sovereign bond markets to more risky asset markets in coming years. Global currency, commodity and debt market may experience huge changes, and it could cause significant challenges to the global financial market conditions over the years.
Opportunity or challenge it may be, this is clearly an ongoing trend on the global scale, and we should be on the lookout for their broader implications as global investors.
more active in moving into high-growth markets. This increased level of access into high-growth economies should make noticeable differences in terms of returns over the years.
And this new opportunity set is not small. By the end of 2040, according to Goldman Sachs research, the combined GDP of BRICs and Mexico will be bigger in dollar terms than that of the G7 economies. Sovereign wealth funds may also pursue to diversify the sources of long-term wealth. They may try to optimize their portfolios with respect to characteristics of their national economies, such as seeking strategic ownership positions in important foreign enterprises. For example, one could
choose to invest in strategic resources which the country lacks. And for countries with abundant human capital and manufacturing capabilities but with little resources, it may make sense for them to invest in natural resources to diversify their national portfolios.
Challenges in sovereign wealth management in 2007
First, global financial market conditions may have become less favorable to new investors. Valuations are at or near historic highs, and global liquidity has pushed up prices in all asset sectors, including equities and commodities. Bond yields are now higher after the lows seen in 2005. Credit spreads remain extremely tight.
Though the global economic environment is still benign and solid expansion of the global economy is most likely in coming years – as suggested by the IMF’s latest report, downside risks for financial markets may be increasing, as the cyclical factors contributing to the low volatility environment could reverse. The visibility of financial losses means that the public is more likely to focus on them should they occur, and this could pose serious reputation challenges to newly-established sovereign wealth funds.
Second, there are risk management challenges. Sovereign wealth funds need to have a
different approach to risk from that of traditional reserves management as the fund moves into non-traditional asset classes.
And yet, it is often difficult to find good data with sufficient history for certain asset classes. And analyzing the market behavior of expanded set of asset classes and finding correlations among them are much more difficult. Moreover, the characteristics of the market indices used to represent alternative asset classes change rapidly, further compromising the usefulness of the historical asset class record. Therefore, sovereign wealth funds need to develop a new modeling approach to confidently monitor and control the market risk of their portfolio assets
Third, a well-defined mandate is crucial to successful management of funds. Problems arise when mandates are poorly defined – leading to bitter arguments about its proper uses. And this problem is acute especially in developing countries, where it is tempting to fund government expenditures. In addition, agreement on the risk/return profile of a fund can sometimes be very difficult if there are differences in views on the characteristics of the fund’s future liability.
There is another issue – that is, the potential emergence of so-called ‘financial protectionism’. The relationship with recipient countries could get more complicated when sovereign wealth funds show particular interest in other countries’ highly strategic industries. How they might react is unclear.
Possible expansion of financial protectionism could bring about adverse effects on the still on-going globalization process – one of major factors bringing global prosperity.
Size
The total size of sovereign wealth funds could now be as large as USD 2.5 trillion, according to a recent research by Morgan Stanley. The funds derived from oil and gas export proceeds account for some two thirds of the total, with the rest consisting of funds mainly controlled by the Asian exporters. The sovereign wealth funds are expected to double in size before 2010 and reach USD 10 trillion mark before 2014. It could well surpass the size of the world’s total official reserves in the not-too-distant future, and will have powerful implications on the global financial markets.
One of implications is apparent portfolio shifts from the sovereign bond markets to more risky asset markets in coming years. Global currency, commodity and debt market may experience huge changes, and it could cause significant challenges to the global financial market conditions over the years.
Opportunity or challenge it may be, this is clearly an ongoing trend on the global scale, and we should be on the lookout for their broader implications as global investors.
Saturday, September 29, 2007
Private Banking - Business Concept
Private banking is the activity of managing private client's money. This term is sometimes opposed to retail banking and corporate banking .
A private bank is a bank which offers private banking services. Such banks would not, for example, do mortgage business, merger and acquisitions or have checking accounts. They specialize in clients with large accounts (the minimum balance varies) who want their money invested and managed for the long term.
The expression private banker usually refers to a professional working in the private banking industry. (speaking of a secretary working in a private bank, you would say that she works in a private bank ).
Speaking about a bank, however, private banker means that the bank offers private banking services and that its legal form is a parternship. Indeed, the first private banks were created in Geneva in the 1800s as partnerships, and some are still in the hands of the original families. In Switzerland, such private banks are called private bankers (a protected term) to distinguish them from the other private banks who are usually share corporations. In practice most people would refer to them as private banks .
We stress that the word private, in the context of banking, neither means confidential nor privately held (as opposed to a listed company), nor available only to a few (like a private boat would be). This being said, we should note that, of course, Swiss private banks are also extremely private in the sense of confidential.
http://switzerland.isyours.com/e/faq/private-banking.html accessed on 29/9/2007
Definition: Bank (Meaning of Bank)
Meaning of Bank: A bench; a high seat, or seat of distinction or judgment; a tribunal or court.
ardictionary.com/Bank/742
Financial Dictionary – Meaning for Bank
From the Italian banca meaning 'bench', the table at which a dealer in money worked.
www.anz.com/edna/dictionary.asp?action=content&content=bank
A private bank is a bank which offers private banking services. Such banks would not, for example, do mortgage business, merger and acquisitions or have checking accounts. They specialize in clients with large accounts (the minimum balance varies) who want their money invested and managed for the long term.
The expression private banker usually refers to a professional working in the private banking industry. (speaking of a secretary working in a private bank, you would say that she works in a private bank ).
Speaking about a bank, however, private banker means that the bank offers private banking services and that its legal form is a parternship. Indeed, the first private banks were created in Geneva in the 1800s as partnerships, and some are still in the hands of the original families. In Switzerland, such private banks are called private bankers (a protected term) to distinguish them from the other private banks who are usually share corporations. In practice most people would refer to them as private banks .
We stress that the word private, in the context of banking, neither means confidential nor privately held (as opposed to a listed company), nor available only to a few (like a private boat would be). This being said, we should note that, of course, Swiss private banks are also extremely private in the sense of confidential.
http://switzerland.isyours.com/e/faq/private-banking.html accessed on 29/9/2007
Definition: Bank (Meaning of Bank)
Meaning of Bank: A bench; a high seat, or seat of distinction or judgment; a tribunal or court.
ardictionary.com/Bank/742
Financial Dictionary – Meaning for Bank
From the Italian banca meaning 'bench', the table at which a dealer in money worked.
www.anz.com/edna/dictionary.asp?action=content&content=bank
Monday, September 3, 2007
Mutual Fund - Business Concept and Regulation
download SEBI regulations for mutual funds from:
http://www.sebi.gov.in/acts/mfreg.pdf
http://www.sebi.gov.in/acts/mfreg.pdf
Merchant banking and Investment Banking - Business Concept and Regulation
Investment banking and Investment Bank
At a very macro level, ‘Investment Banking’ as the term suggests, is concerned with the primary function of assisting the securities market in its function of capital intermediation, i.e. the movement of financial resources from those who have them(the investors), to those who need to make use of them for generating GDP (the Issuers)[1].
Banking and financial institutions on the one hand and securities markets on the other hand are the two broad platforms of institutional intermediation for capital flows in the economy. Therefore, investment banks are the counterparts of banks in financial markets in the function of intermediation in resource allocation.
The term ‘investment banking’ is of American origin. Their counterparts in UK were termed as ‘merchant banks’ and they had confined themselves to security market intermediation whereas American investment banks undertook both fund-based and advisory roles. American investment banks entered the UK and European markets and extended the scope of merchant banking to investment banking. In India also, SEBI declared regulations for merchant banks only. But the entry of American investment banks is changing the profile of merchant banks.
Responsibility of Merchant Banker: Merchant banking is not merely about marketing of securities in an agency capability. The regulatory authorities require the merchant banking firms to promote quality issues, maintain integrity and ensure compliance with the law on own account and on behalf of the issuers as well.
Heart of investment banking consists of advising corporations on how best to configure their balance sheets – wit the aim of maximizing shareholder value and executing the transactions that flow from that advice [2].
The title “investment banker” is usually reserved for those individuals within an investment banking firm who are responsible for the firm’s relationship with the issuer, as opposed to the investor clients, i.e., with clients who engage investment banks to issue new securities, restructuring existing liabilities; either increasing or decreasing leverage, moving from public to private ownership.
Business Portfolio of Investment Banks
Globally, investment banks handle significant fund-based business of their own in the capital market along with their non-fund service portfolio which is offered to clients. However, various services or segments of services are handled either on the same balance sheet or through subsidiaries and affiliates depending upon the regulatory requirements in the operating environments of each country. All these activities are segmented across three broad platforms-equity market activity, debt market activity, and mergers and acquisitions (M&A) activity.
Investment banking
Core business portfolio
Fund based
Equity: Underwriting, market making
Debt: Underwriting, market making
M & A: Investing in private equity, LBOs and MBOs
Non-fund based
Equity: Merchant banking (Public issue management), Private placement
Debt: Public issue management, Private placement, Securitisation for finance companies and banks
M&A: M&A advisory, Corporate Advisory, Project Advisory
Support business portfolio
Fund based
Equity: Proprietory trading and portfolio investing, private equity funds and asset management funds
Debt: Proprietory trading and investing, asset management funds
Derivatives: Proprietory trading, hedgefund investments
Non-fund based
Equity: Equity broking, distribution, asset management, custodial services, wealth management (private banking), research and analysis.
Debt: Debt market broking, distribution, asset management, research
Derivatives: Derivative broking, risk management services, custodial services
References
1. Pratap Subramanyan, Investment Banking, Tata McGraw-Hill Pub., New Delhi, 2005
2. Kenneth C. Froewiss, "Investment Banking," Chapter A2 in Handbook of Modern Finance, Edited by Dennis Logue and James K. Seward, Warren Gorham and Lamont, 2007
For SEBI Regulations for Merchant Bankers in India go to
http://nrao-mgmt-smi-handbook.blogspot.com/2007/10/merchant-banking-regulations-in-india.html
At a very macro level, ‘Investment Banking’ as the term suggests, is concerned with the primary function of assisting the securities market in its function of capital intermediation, i.e. the movement of financial resources from those who have them(the investors), to those who need to make use of them for generating GDP (the Issuers)[1].
Banking and financial institutions on the one hand and securities markets on the other hand are the two broad platforms of institutional intermediation for capital flows in the economy. Therefore, investment banks are the counterparts of banks in financial markets in the function of intermediation in resource allocation.
The term ‘investment banking’ is of American origin. Their counterparts in UK were termed as ‘merchant banks’ and they had confined themselves to security market intermediation whereas American investment banks undertook both fund-based and advisory roles. American investment banks entered the UK and European markets and extended the scope of merchant banking to investment banking. In India also, SEBI declared regulations for merchant banks only. But the entry of American investment banks is changing the profile of merchant banks.
Responsibility of Merchant Banker: Merchant banking is not merely about marketing of securities in an agency capability. The regulatory authorities require the merchant banking firms to promote quality issues, maintain integrity and ensure compliance with the law on own account and on behalf of the issuers as well.
Heart of investment banking consists of advising corporations on how best to configure their balance sheets – wit the aim of maximizing shareholder value and executing the transactions that flow from that advice [2].
The title “investment banker” is usually reserved for those individuals within an investment banking firm who are responsible for the firm’s relationship with the issuer, as opposed to the investor clients, i.e., with clients who engage investment banks to issue new securities, restructuring existing liabilities; either increasing or decreasing leverage, moving from public to private ownership.
Business Portfolio of Investment Banks
Globally, investment banks handle significant fund-based business of their own in the capital market along with their non-fund service portfolio which is offered to clients. However, various services or segments of services are handled either on the same balance sheet or through subsidiaries and affiliates depending upon the regulatory requirements in the operating environments of each country. All these activities are segmented across three broad platforms-equity market activity, debt market activity, and mergers and acquisitions (M&A) activity.
Investment banking
Core business portfolio
Fund based
Equity: Underwriting, market making
Debt: Underwriting, market making
M & A: Investing in private equity, LBOs and MBOs
Non-fund based
Equity: Merchant banking (Public issue management), Private placement
Debt: Public issue management, Private placement, Securitisation for finance companies and banks
M&A: M&A advisory, Corporate Advisory, Project Advisory
Support business portfolio
Fund based
Equity: Proprietory trading and portfolio investing, private equity funds and asset management funds
Debt: Proprietory trading and investing, asset management funds
Derivatives: Proprietory trading, hedgefund investments
Non-fund based
Equity: Equity broking, distribution, asset management, custodial services, wealth management (private banking), research and analysis.
Debt: Debt market broking, distribution, asset management, research
Derivatives: Derivative broking, risk management services, custodial services
References
1. Pratap Subramanyan, Investment Banking, Tata McGraw-Hill Pub., New Delhi, 2005
2. Kenneth C. Froewiss, "Investment Banking," Chapter A2 in Handbook of Modern Finance, Edited by Dennis Logue and James K. Seward, Warren Gorham and Lamont, 2007
For SEBI Regulations for Merchant Bankers in India go to
http://nrao-mgmt-smi-handbook.blogspot.com/2007/10/merchant-banking-regulations-in-india.html
Stock Broking and Sub-broking - Business Concept and Regulation
Download regulations for Stockbroking and subbroking from:
http://www.sebi.gov.in/act/stockreg1.pdf
Indian definitions
SECURITIES AND EXCHANGE BOARD OF INDIA (STOCK-BROKERS AND SUB-BROKERS) REGULATIONS, 1992
Subsection
2(gb) “stock broker” means a member of a stock exchange;
2(gc) “sub-broker” means any person not being a member of stock exchange who acts on behalf of a stock broker as an agent or otherwise for assisting the investors
in buying, selling or dealing in securities thorough such stock brokers;”
2(gd) `trading member’ means a member of the derivatives exchange or derivatives segment of a stock exchange and who settles the trade in the clearing corporation or clearing house through a clearing member;
US Definitions
The term “broker” has the same meaning as given in section 3 of the Securities Exchange Act of 1934 [15 U.S.C. 78c].
The term “dealer” has the same meaning as given in section 3 of the Securities Exchange Act of 1934 [15 U.S.C. 78c], but does not include an insurance company or investment company.
http://www.sebi.gov.in/act/stockreg1.pdf
Indian definitions
SECURITIES AND EXCHANGE BOARD OF INDIA (STOCK-BROKERS AND SUB-BROKERS) REGULATIONS, 1992
Subsection
2(gb) “stock broker” means a member of a stock exchange;
2(gc) “sub-broker” means any person not being a member of stock exchange who acts on behalf of a stock broker as an agent or otherwise for assisting the investors
in buying, selling or dealing in securities thorough such stock brokers;”
2(gd) `trading member’ means a member of the derivatives exchange or derivatives segment of a stock exchange and who settles the trade in the clearing corporation or clearing house through a clearing member;
US Definitions
The term “broker” has the same meaning as given in section 3 of the Securities Exchange Act of 1934 [15 U.S.C. 78c].
The term “dealer” has the same meaning as given in section 3 of the Securities Exchange Act of 1934 [15 U.S.C. 78c], but does not include an insurance company or investment company.
Primary Dealers - Business Concept and Regulation
Download the master circular dated 2nd July 2007 of RBI for Primary dealers activities from:
http://rbidocs.rbi.org.in/rdocs/notification/PDFs/78433.pdf
Who are Primary Dealers & Satellite Dealers?
Primary Dealers / wholesalers of government securities can be loosely referred to as Merchant Bankers to Government of India, comprising the first tier of the government securities market. These were formed in the year 1996 to strengthen the market infrastructure and put in place an improvised and an efficient secondary market trading system.
What role do Primary Dealers play?
The role of Primary Dealers is to:
Commit participation as Principals in Government of India issues through bidding in auctions
Provide underwriting services
Ensuring subscription to the above issues through obligatory maintenance of success ratio levels
Market making by way of offering firm or indicative buy - sell / bid - ask quotes on daily basis
Commit secondary market turnover
Popularize G-sec among common public through retail trading to widen the scope
(From http://www.gstcl.com/site/faq.htm#1 Gilt Securities Trading Corporation Ltd. A subsidiary of Canara Bank Ltd., India)
http://rbidocs.rbi.org.in/rdocs/notification/PDFs/78433.pdf
Who are Primary Dealers & Satellite Dealers?
Primary Dealers / wholesalers of government securities can be loosely referred to as Merchant Bankers to Government of India, comprising the first tier of the government securities market. These were formed in the year 1996 to strengthen the market infrastructure and put in place an improvised and an efficient secondary market trading system.
What role do Primary Dealers play?
The role of Primary Dealers is to:
Commit participation as Principals in Government of India issues through bidding in auctions
Provide underwriting services
Ensuring subscription to the above issues through obligatory maintenance of success ratio levels
Market making by way of offering firm or indicative buy - sell / bid - ask quotes on daily basis
Commit secondary market turnover
Popularize G-sec among common public through retail trading to widen the scope
(From http://www.gstcl.com/site/faq.htm#1 Gilt Securities Trading Corporation Ltd. A subsidiary of Canara Bank Ltd., India)
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