What is financial market.

Role of Financial Markets

Types of Financial markets
Primary financial markets
IPO Initial Public Offering
Pre-initial Public Offering Private Placement

Role of Investment Banker for IPO


Secondary financial markets
Auction markets
Automated market
Over the counter market
Electronic Communication Networks ECNs
Institutional Networks Instinets

Brokers and Dealers
Stock Market Index


Financial markets are places or systems where
financial assets are bought and sold.


Help allocate the funds optimally


Primary Markets
Secondary Markets
Primary markets are those markets where
shares or TFCs are bought and sold for the
first time.

Company-------------------general
public
shareholder

Initial public offering where company
directly sells to the prospective shareholders
Prospectus
Abridged prospectus
Offer for sale
Pre-initial public offering private
placement
Selling of share privately by investment bankers
on behalf of issuers to the institutional investors.
Advantage
cost of issue is saved.
Disadvantages:
cost of financing is high
Restrictive conditions
Designing the public Issue
What to issue
When to issue
What should be the price
What should be the features of issue
Forming underwriting syndicates
Privatizations
Mergers and Acquisitions
J P MORGAN
MORGAN STANELY
SALOMON SMITH BARNEY
CITIGROUP INC
BOSTON CONSULTING GROUP
MISUIBISHI TOKYO BANK
BANK OF AMERICA
MERRIL LYNCH
BEAR STEARNS
Orix Investment Bank
Atlas Investment Bank
Trust Investment Bank
IGI Investment Bank
Fidelity Investment Bank
Escorts Investment Bank
Prudential Investment Bank

Secondary financial markets are where
already issued shares are bought and sold
Auction markets physical markets with a
trading floor and an open outcry system

Automated markets
Buying and selling KATS
Payment NCSS
Delivery CDS

Over the Counter market OTC MARKET
These are stock exchanges which have been
designed to facilitate small capital companies to
raise capital from general public.
Minimum capital requirement for listing is Rs. 10
million.
Company has to issue atleast Rs. 5 million or 25%
whichever is high
Electronic Communication Networks - ECNs
Institutional Networks - Instinet
Dealers
are investors
buy for themselves
Assume investment risk
Earn profit on investment
Have vested interest
Brokers
Are not investors
Buy for others
Have no vested interest
Earn commission on trading transactions
In Pakistan, no distinction is made in dealers and brokers.
Brokers/Dealers are members of stock exchanges and are
only authorized to buy and sell in the stock exchanges