The Structure of Financial Markets 2 by Edu Pristine

Author of lecture The Structure of Financial Markets 2

Edu Pristine

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Excerpts from the accompanying material

... participants in the market for over-the-counter derivatives. ISDA Master Agreement – ISDA has developed “Master Contracts” covering range of OTC derivatives – allow for greater flexibility ...

... movements by trading out of their own inventory. If there is a large shift in demand on the buy or sell side, the specialist will step in and ...

... physically go onto the floor and find a matching buyer or seller. Trade was facilitated by identified locations for trade in specific shares. Screen Trading: Computerised systems for matching buyers and sellers, have replaced open outcry trading at almost all the stock exchanges. Buyers and sellers enter an ...

... prices, and obtain a narrower bid–ask spread than is available from a NASDAQ dealer. Because of this, most of the standard smaller size trade has migrated to these electronic systems. Has led to an ...

... steps: Comparison and confirmation - Before further processing, comparison and confirmation of the trade is done. Buyer and seller exchange messages confirming both their agreement to trade and all the details of the trade. Broker needs to obtain positive confirmation from the investor (sometimes referred to as affirmation) that the trade complies ...

... All subsequent post-trade processing take place electronically, without manual intervention. Leads to major reduction in operational risks ...

... are too large to be placed directly on the market and breaking them up and splitting them between buyers. Wholesale broking is carried out both by investment banks and by a number of small specialised wholesale brokerage firms. These firms take little direct credit risk, but potentially huge operational risks due to the large value of deals that they ...

... and reduce the overall costs of intermediation between savers and borrowers. Some of these new products, which provide great flexibility, can be used to bypass regulatory ...