Participants of

the Financial
Services Sector

Aiman Shaikh
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1. Investment Banks
Investment banks are financial institutions
that facilitate large and complex financial
transactions.

Key Roles:
Advisors and financiers: Help companies
raise capital (IPO, bonds), merge,
acquire.
Market makers: Trade stocks, bonds,
derivatives; provide brokerage services.
Risk managers: Manage currency,
interest rate risks for corporate clients.
Asset managers: Invest funds for
institutions (pension funds, charities).
Diverse offerings: Most specialize, but
some offer all services.
Expanding services: Proprietary trading,
hedge fund services, private equity.

Examples:
JP Morgan Chase & Co
Morgan Stanley
Goldman Sachs Group, Inc
HSBC
Citigroup
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2. Custodians

Custodians are financial institutions that

safeguard securities (like stocks and bonds)
on behalf of clients (fund managers, pension
funds).

Key Roles:
Safekeeping: Holds assets securely.
Transaction management: Handles
buying, selling, income collection,
corporate actions.
Reporting: Provides regular updates on
portfolio holdings.
Additional services: Stock lending,
performance measurement, cash
management.
Industry consolidation: Dominated by a
few global custodians (e.g., BNY Mellon,
State Street).

Examples:
Citigroup
BNY Mellon
Standard Chartered Bank
BNP Paribas Securities Services
HSBC
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3. Retail/Commercial Banks
Retail/Commercial banks are financial
institutions serving individuals and
businesses by accepting deposits, providing
loans, and facilitating payments.

Key Services:
Deposits: Savings, checking accounts
Loans: Mortgages, personal loans,
business loans
Payments: Checks, debit cards
Other Financial Products: Investments,
insurance (for financial conglomerates)

Role in Global Financial Markets:

Core of the financial system: Provide
essential banking services to the public.
Intermediaries: Facilitate the flow of
funds between savers and borrowers.
Payment systems: Support economic
activity through efficient payment
processing.
Risk management: Manage credit,
liquidity, and market risks.
Innovation: Drive financial inclusion and
develop new products (e.g., digital
banking).

Examples:
Bank of China
Barclays
Bank of America
JP Morgan Chase
HSBC
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4. Savings Institutions
Savings Institutions are financial institutions
that primarily focus on providing savings and
lending services to individuals. They often
operate as mutual societies, owned by their
customers (members).

Key Characteristics:
Origin: Specialized in savings products.
Ownership: Member-owned (mutual
societies).
Services: Offer similar products to retail
banks (savings, loans, etc.).
Evolution: Many have merged, been
acquired, or transformed into publicly
traded banks (demutualization).

Role in Global Financial Markets:

Serve retail customers: Provide access to
financial services.
Competition: Offer alternatives to
traditional banks.
Financial inclusion: Can focus on
underserved markets.
Market dynamics: Influence interest rates
and savings behavior.

Examples:
Norinchukin Bank
Desjardins Group
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5. Peer-to-Peer (P2P)
Lending and Crowdfunding
P2P Lending
Direct lending: Bypasses banks,
connecting borrowers and lenders.
Higher returns: Offers potentially higher
returns for lenders but with increased
risk.
Lower costs: Often lower interest rates
for borrowers.
Platform fees: P2P platforms earn fees
for matching borrowers and lenders.
Risk factors: Unsecured loans, potential
liquidity issues.
Crowdfunding
Collective funding: Raising funds from a
large number of people.
Types: Donation-based, debt-based
(loans), equity-based (ownership).
Benefits for businesses: Access to
diverse funding, potential customer base
expansion.
Challenges: Regulatory environment,
investor protection.
Role in Global Financial Markets
Disruption: Challenge traditional banking
models.
Financial inclusion: Expand access to
finance for individuals and businesses.
Innovation: Drive new financial products
and services.
Risk management: Require robust risk
assessment and management practices.
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6. Insurance Companies
Insurance provides financial protection
against potential losses.

Key Functions:
Risk management: Offers policies for
various risks (life, property, liability, etc.).
Investment: Invests premiums in equities
and bonds, impacting financial markets.
Capital allocation: Holds cash reserves to
pay claims, influencing liquidity.

Role in Global Financial Markets:

Risk transfer: Reduces uncertainty for
individuals and businesses.
Capital provider: Significant investor in
equities and bonds.
Financial stability: Contributes to
economic resilience.

Examples:
Berkshire Hathaway
Nippon Life
Zurich Insurance Group
Allstate
Allianz
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7. Pension Funds
Retirement schemes are financial plans to
save for retirement.

Types:
Employer-sponsored: Traditional
pensions (defined benefit) or contribution-
based (defined contribution).
Personal: Self-directed savings plans
.

Role in Financial Markets:

Long-term investors: Significant holders
of stocks, bonds, and cash.
Market impact: Influence asset prices and
investment trends.
Economic stability: Provide financial
security for retirees and contribute to
overall economic growth.

Examples:
The Government Pension Investment Fund
of Japan (GPIF)
Federal Retirement Thrift
California Public Employees
New York City Retirement
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8. Fund Managers
Fund managers invest money on behalf of
clients (individuals, institutions).

Key Roles:
Portfolio management: Build and
manage investment portfolios.
Asset allocation: Determine investment
mix (stocks, bonds, etc.).
Risk management: Balance returns with
risk.
Performance: Strive to outperform
market benchmarks.

Types:
Institutional: Manage funds for pensions,
insurance companies, etc.
Retail: Manage funds for individual
investors.

Impact on Financial Markets:

Market participants: Significant buyers
and sellers of securities.
Market liquidity: Influence trading
volumes and price movements.
Investment trends: Shape investment
preferences and styles.

Examples:
BlackRock
Fidelity Investments
Interactive Brokers LLC
Vanguard Group
Charles Schwab
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9. Stockbrokers and Wealth

Managers
Stockbrokers execute trades on behalf of
clients, while wealth managers offer
comprehensive financial advice and
management.

Types of Stockbrokers and Wealth

Managers:
Execution-only: Execute trades without
advice (low-cost, for experienced
investors).
Robo-advisors: Automated investment
advice (low-cost, for smaller portfolios).
Advisory/Discretionary: Offer financial
advice or full portfolio management
(higher fees, for larger portfolios).
Institutional: Focus on large institutional
clients (high-volume trading).

Role in Global Financial Markets:

Market intermediaries: Facilitate buying
and selling of securities.
Investment access: Provide individuals
and institutions access to financial
markets.
Financial advice: Offer guidance on
investment decisions.
Market liquidity: Contribute to efficient
trading and price discovery.
Revenue generation: Earn fees and
commissions from clients.
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10. Platforms

Platforms are online marketplaces for

financial products.

Key Functions:
Investment aggregation: Combine
multiple investments into one view.
Product range: Offer various funds,
pensions, and insurance products.
Trading and custody: Facilitate buying,
selling, and holding assets.
Efficiency: Streamline portfolio
management for advisors.

Role in Financial Markets:

Distribution channels: Connect fund
managers with investors.
Investor access: Provide individuals and
advisors with investment options.
Efficiency gains: Improve operational
processes for financial intermediaries.
Revenue generation: Charge fees for
services.

Examples:
Nasdaq
Mambu
New York Stock Exchange (NYSE)
London Stock Exchange
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11. Private Banks

Private banks cater to High-Net-Worth
Individuals (HNWIs) with specialized
services.

Key Services:
Wealth management
Estate planning
Tax planning
Insurance
Lending
Characteristics:
High entry barrier: Minimum wealth
requirements.
Personalized service: Dedicated
relationship managers.
Offshore options: Banking in jurisdictions
with favorable tax regimes.
Increasing competition: Blurring lines
with retail banking.
Role in Global Financial Markets:
Wealth management hub: Manage and
grow client wealth.
Financial intermediaries: Facilitate
investments and lending.
Market participants: Influence
investment trends and asset prices.
Cross-border capital flows: Contribute
to global financial integration.
Examples:
Deutsche Bank
Bank of America
JP Morgan Private Bank
UBS
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12. Sovereign Wealth Funds

(SWFs)
SWFs are state-owned investment funds
with substantial assets.

Key Characteristics:
Origin: Surplus funds from trade, oil
revenues, or privatization.
Investment focus: Global diversification
for high returns.
Size: Massive funds with growing
influence.
Transparency: Increasingly transparent
due to Santiago Principles.
Role in Global Financial Markets:
Major investors: Significant impact on
asset prices.
Market stability: Can provide liquidity
and support markets.
Economic diversification: Reduce
reliance on natural resources.
Global influence: Shape investment
trends and policies.
Challenges: Concerns over transparency
and potential for market manipulation.
Examples:
Government Pension Fund Global
(Norway)
Abu Dhabi Investment Authority (UAE)
Government of Singapore Investment
Corporation (Singapore)
Qatar Investment Authority (Qatar)
Australian Future Fund (Australia)
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13. Industry Trade and
Professional Bodies
Industry trade bodies represent the
collective interests of financial firms.

Key Roles:
Advocacy: Represent industry views to
regulators and policymakers.
Standard setting: Develop industry
standards and best practices.
Market development: Promote efficient
and fair markets.
Education: Provide industry education
and training.
Networking: Facilitate collaboration
among industry participants.
Impact on Global Financial Markets:
Industry cohesion: Foster cooperation
and collaboration.
Regulatory influence: Shape financial
regulations and policies.
Market efficiency: Promote fair and
transparent markets.
Investor protection: Advocate for
investor interests.

Examples:
ICMA: International Capital Market
Association (bonds)
ISDA: International Swaps and Derivatives
Association (derivatives)
International Organization of Securities
Commission (IOSCO)
SIFMA: Securities Industry and Financial
Markets Association (US equities)
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14. Third-Party
Administrators (TPAs)

TPAs specialize in handling administrative

tasks for investment firms.

Key Roles:
Outsourcing partner: Handles non-core
functions for investment firms.
Efficiency: Streamlines operations and
reduces costs.
Focus: Allows firms to concentrate on
investment management and client
service.

Impact on Financial Markets:

Industry growth: Increasing use of
outsourcing drives TPA expansion.
Operational efficiency: Improves overall
industry efficiency.
Cost reduction: Enables firms to offer
competitive services.

Thank You