Upload
bailey-mackay
View
220
Download
2
Tags:
Embed Size (px)
Citation preview
Banking & Banking & Financial ServicesFinancial Services
Securities & Investment Securities & Investment ManagementManagement
ByBy
Makarand DiwanMakarand Diwan
ContentsContents Business Entity, Equity and DebtBusiness Entity, Equity and Debt Financial InstrumentsFinancial Instruments Financial Market PlayersFinancial Market Players Investment Management & Security AnalysisInvestment Management & Security Analysis Securities TransactionsSecurities Transactions Securities related Systems & ComponentsSecurities related Systems & Components Financial Systems-Design ConsiderationsFinancial Systems-Design Considerations Securities Systems-Issues/Pain PointsSecurities Systems-Issues/Pain Points An Example of Investment Accounting An Example of Investment Accounting
SystemSystem
Business EntityBusiness Entity
IndividualIndividual
VsVs
Business EntityBusiness Entity Separate Legal Separate Legal
ExistenceExistence Going ConcernGoing Concern Limited LiabilityLimited Liability
There are only two ways of raising There are only two ways of raising moneymoney
Your own pocketYour own pocket
Somebody else’s Somebody else’s pocketpocket
How to raise Money?How to raise Money?
Equity and DebtEquity and Debt
When business entities want to raise When business entities want to raise money there are two options:money there are two options:
EquityEquity Shareholders’ (Owners’) Investment Shareholders’ (Owners’) Investment
DebtDebt Borrowing from Banks & Financial Borrowing from Banks & Financial
InstitutionsInstitutions Issue of Debt InstrumentsIssue of Debt Instruments
EquityEquity
Shareholders’ Shareholders’ FundsFunds
RiskRisk Limited LiabilityLimited Liability Change of Change of
OwnershipOwnership No Maturity DateNo Maturity Date Dividend IncomeDividend Income AppreciationAppreciation
DebtDebt
Bank LoansBank Loans Issue of Debt Issue of Debt
SecuritiesSecurities RepaymentRepayment Long/Short TermLong/Short Term Secured/Secured/
UnsecuredUnsecured Interest CostInterest Cost
Types of Types of Instruments/SecuritiesInstruments/Securities
CurrencyCurrency Local & ForeignLocal & Foreign
Equity SharesEquity Shares Common StockCommon Stock
DebtDebt Discounted InstrumentsDiscounted Instruments Fixed Income BondsFixed Income Bonds Variable IncomeVariable Income
Convertible Convertible InstrumentsInstruments Preferred StockPreferred Stock Convertible BondConvertible Bond
Mutual Fund UnitsMutual Fund Units
Equities: Common StockEquities: Common Stock For definition see For definition see
http://www.investorwords.com/986/common_stohttp://www.investorwords.com/986/common_stock.htmlck.html
Usually Listed on the Usually Listed on the Stock ExchangeStock Exchange
Buy/sell transactions Buy/sell transactions can be done easilycan be done easily
Prices move up/down Prices move up/down Pays dividend Pays dividend Capital Appreciation Capital Appreciation
through appreciation in through appreciation in stock pricestock price
Risk of Loosing capital Risk of Loosing capital due to depreciation in due to depreciation in stock pricestock price
$10
$12
$15
$0.50 Bought 100 shares of
XYZ at $10 per share in Jan 2005.
Company paid $0.50 per share as dividend in Dec 2005.
Sold 100 shares of XYZ in Dec 2006 at $15 per share.
The investor earned an income of $50 as dividend in 2005.
The investor earned a long term capital gains income of $500 in 2006.
Debt: Discounted Debt: Discounted InstrumentsInstruments
There is no periodic There is no periodic interest paymentinterest payment
An investor buys at a An investor buys at a discounted value to discounted value to receive a fixed amount at receive a fixed amount at a future time (maturity a future time (maturity date)date)
Price varies based on the Price varies based on the remaining time to remaining time to maturity and expected maturity and expected interest rateinterest rate
ExamplesExamples Certificate of Deposit (CD)Certificate of Deposit (CD) US Treasury Bill (TBILL)US Treasury Bill (TBILL) Commercial Paper (CP)Commercial Paper (CP)
P $100
If i is the rate of interest then:
P + P * i = $100
P (1 + i) = $100
P = $100/(1 + i)
04/01/07 04/01/08
Debt: Fixed Income BondDebt: Fixed Income Bond Buy at a Market Price.Buy at a Market Price. Price quoted as a Price quoted as a
percentagepercentage Each bond has a PAR Each bond has a PAR
valuevalue Interest Rate and Maturity Interest Rate and Maturity
Date is FixedDate is Fixed Periodic Interest Periodic Interest
Payments are received Payments are received until maturityuntil maturity
At the time of maturity the At the time of maturity the principal amount is principal amount is receivedreceived
Price fluctuates with the Price fluctuates with the interest rate expectationsinterest rate expectations
6% US Treasury Bond 2010
Current Date 4/16/2007
Coupon Pays every 4/16 and 10/16
Maturity date 10/16/2010
P = Present value of all future cash flows discounted at an interest rate which is the expected market interest rate or yield.
$3
$3
$3
$3
$3
$3
$103
P
4/07 10/07 4/08 10/08 4/09 4/1010/09 10/10
Debt: Variable IncomeDebt: Variable Income
Same principles as Fixed Income Bond Same principles as Fixed Income Bond but Interest Rate changes from time to but Interest Rate changes from time to timetime
Interest Rate can float with a benchmarkInterest Rate can float with a benchmark Interest Rate can change based on time Interest Rate can change based on time
periodperiod E.g. ARM, Step-up Bond, Step-Down E.g. ARM, Step-up Bond, Step-Down
Bond, Treasury Inflation Protection Bond, Treasury Inflation Protection BondsBonds
Financial Market Financial Market ParticipantsParticipants
InvestorsInvestors BanksBanks Federal Reserve SystemFederal Reserve System Automated Clearing House (ACH)Automated Clearing House (ACH) IssuersIssuers Credit Rating AgenciesCredit Rating Agencies Registrars & Transfer AgentsRegistrars & Transfer Agents DepositoriesDepositories Stock ExchangesStock Exchanges BrokersBrokers Market MakersMarket Makers Portfolio Managers/Mutual FundsPortfolio Managers/Mutual Funds CustodiansCustodians
InvestorsInvestors Investors are the key players in any Investors are the key players in any
marketmarket
More the investors and more money More the investors and more money available for investment means better available for investment means better depth and efficiency of the marketdepth and efficiency of the market
Individual InvestorsIndividual Investors
Institutional InvestorsInstitutional Investors
BanksBanks
A Bank mobilizes savings of the community A Bank mobilizes savings of the community through deposits made in checking, savings through deposits made in checking, savings and CDsand CDs
Holds money in an electronic form thereby Holds money in an electronic form thereby simplifying movement of moneysimplifying movement of money
Provides loans for personal and business Provides loans for personal and business purposespurposes
Provides services such as remittance, Provides services such as remittance, currency exchange, Commercial Bills currency exchange, Commercial Bills Collection and discounting, Issue of Credit Collection and discounting, Issue of Credit CardsCards
Federal Reserve SystemFederal Reserve System The The Federal Reserve SystemFederal Reserve System
(also the (also the Federal ReserveFederal Reserve; ; informally informally The FedThe Fed) is the ) is the central banking systemcentral banking system of the of the United StatesUnited States..
The Federal Reserve System is a The Federal Reserve System is a quasi-governmental banking quasi-governmental banking system composed of (1) a system composed of (1) a presidentially-appointed presidentially-appointed Board of GovernorsBoard of Governors of the Federal of the Federal Reserve System in Washington, Reserve System in Washington, D.C.; (2) the Federal Open Market D.C.; (2) the Federal Open Market Committee; (3) 12 regional Committee; (3) 12 regional Federal Reserve Banks located in Federal Reserve Banks located in major cities throughout the major cities throughout the nation; and (4) numerous private nation; and (4) numerous private member banks, which own member banks, which own varying amounts of stock in the varying amounts of stock in the regional Federal Reserve Banks. regional Federal Reserve Banks. Ben Bernanke serves as the Ben Bernanke serves as the current Chairman of the Board of current Chairman of the Board of Governors of the Federal Reserve Governors of the Federal Reserve System.System.
Clearing HousesClearing Houses
Banks are members Banks are members of clearing house(s)of clearing house(s)
Checks are cleared Checks are cleared electronically by electronically by the clearing house the clearing house through the through the member banksmember banks
ACH-Automated ACH-Automated Clearing HouseClearing House
Check21Check21
How is a check clearedHow is a check clearedPaye
r Paye
e
Payer’s
Bank
Payee’s
Bank
Issues a check
Deposits the check
Clearing House
Sends the check for collection
Central Bank
Receives check for payment
Bank account of Payer’s Bank with the Central Bank is Debited
Bank account of Payee’s Bank with the Central Bank is Credited
Payer
sees his
Payee
sees his
Balance
go up
Balance
go
down
IssuersIssuers Issuers of Equity or Issuers of Equity or
Debt InstrumentsDebt Instruments
Types of IssuersTypes of Issuers Federal GovernmentFederal Government State GovernmentsState Governments MunicipalitiesMunicipalities CorporateCorporate Foreign IssuersForeign Issuers
SEC-Regulatory SEC-Regulatory AuthorityAuthority Registered SecuritiesRegistered Securities
Credit Rating AgenciesCredit Rating Agencies Credit Rating Agencies Credit Rating Agencies
provide ratings to provide ratings to issuers’ and the debt issuers’ and the debt instruments issued by instruments issued by themthem
S&P, Moody’s and Fitch S&P, Moody’s and Fitch are the three prominent are the three prominent Credit Rating AgenciesCredit Rating Agencies
S&P Credit Ratings S&P Credit Ratings definitions are available definitions are available at at http://www2.standardandpoors.com/portahttp://www2.standardandpoors.com/portal/site/sp/en/us/page.article/l/site/sp/en/us/page.article/2,1,3,0,1148442391999.html2,1,3,0,1148442391999.html
Registrar & Transfer Registrar & Transfer AgentsAgents
Issuers are required to keep Issuers are required to keep track of current owners/holders track of current owners/holders of the financial instruments of the financial instruments issued by themissued by them
To achieve this they must record To achieve this they must record transfers due to purchase/sell transfers due to purchase/sell transactions or due to death/ transactions or due to death/ inheritance, gifts, etc.inheritance, gifts, etc.
A register of current holders is A register of current holders is maintained and is used to payout maintained and is used to payout dividends/interest or record dividends/interest or record stock splits, mergers, stock splits, mergers, redemptions, etc.redemptions, etc.
Companies appoint independent Companies appoint independent Registrar & Transfer Agents or Registrar & Transfer Agents or have their own in-house have their own in-house department to do these functions department to do these functions
Example: Boeing’s R&T Example: Boeing’s R&T information is available on its information is available on its website at website at http://www.boeing.com/companyhttp://www.boeing.com/companyoffices/financial/transfer.htmloffices/financial/transfer.html
Stock ExchangesStock Exchanges It is an association of its It is an association of its
members brokersmembers brokers Stocks are listed on the Stocks are listed on the
Stock ExchangesStock Exchanges An organized market to An organized market to
buy and sell securitiesbuy and sell securities Stock Exchange ensures Stock Exchange ensures
settlement of tradessettlement of trades Provides necessary Provides necessary
depth and sophistication depth and sophistication to the marketto the market
Provide liquidityProvide liquidity
DepositoriesDepositories
Through depository Through depository participants, participants, securities holdings securities holdings of investors are held of investors are held with depositories in with depositories in an electronic form.an electronic form.
The Trades are The Trades are cleared and settled cleared and settled through through depositories depositories electronically.electronically.
BrokersBrokers Brokers are members of Brokers are members of
one or more stock one or more stock exchangesexchanges
Brokers are depository Brokers are depository participantsparticipants
We maintain our stock We maintain our stock related accounts with related accounts with brokersbrokers
We trade on various stock We trade on various stock exchanges and in various exchanges and in various types of securities types of securities through brokersthrough brokers
Sometimes Brokers also Sometimes Brokers also provide investment adviseprovide investment advise
Market MakerMarket Maker A market maker makes a market in one or A market maker makes a market in one or
more securitiesmore securities He is always ready to buy or sell a security in He is always ready to buy or sell a security in
which he makes the marketwhich he makes the market A two-way quote is given by the market A two-way quote is given by the market
makermaker Bid – Price at which the buyer is ready to buyBid – Price at which the buyer is ready to buy Ask – Price at which the seller is ready to sellAsk – Price at which the seller is ready to sell
The difference in the Bid and Ask price is the The difference in the Bid and Ask price is the spread that market maker earns as his profit.spread that market maker earns as his profit.
If a security is liquid, the spread is usually If a security is liquid, the spread is usually less and if the security is illiquid the spread less and if the security is illiquid the spread is usually high.is usually high.
Portfolio Managers/Mutual Portfolio Managers/Mutual FundsFunds
Portfolio Managers provide Investment Portfolio Managers provide Investment Management Services to Individual Management Services to Individual Investors and Institutional InvestorsInvestors and Institutional Investors
Usually Portfolio Managers will provide Usually Portfolio Managers will provide their services to High Net-worth individualstheir services to High Net-worth individuals
Mutual Funds also perform investment Mutual Funds also perform investment management functions for a large number of management functions for a large number of small investors. They pull together financial small investors. They pull together financial resources of small investors and then invest resources of small investors and then invest those in various financial instruments. They those in various financial instruments. They usually offer a better rate of return than the usually offer a better rate of return than the novice investor would have got had he/she novice investor would have got had he/she invested on his/her own.invested on his/her own.
CustodiansCustodians Custodians offer Custody Services to:Custodians offer Custody Services to:
Institutional CustomersInstitutional Customers Portfolio ManagersPortfolio Managers Mutual Fund ManagersMutual Fund Managers
Custodians maintain the safe custody of Custodians maintain the safe custody of their clients’ investmentstheir clients’ investments
Custodians execute clients instructions Custodians execute clients instructions for settlement of tradesfor settlement of trades
Custodians ensure collection of income Custodians ensure collection of income due on their clients’ investments due on their clients’ investments
Investment ManagementInvestment Management Risk vs. RewardRisk vs. Reward
Higher the expectation of reward higher the Higher the expectation of reward higher the riskrisk
DiversificationDiversification Not to put all eggs in one basketNot to put all eggs in one basket
Asset AllocationAsset Allocation 10% Gold, 40% US Equities, 25% Fixed 10% Gold, 40% US Equities, 25% Fixed
Income, 20% Real Estate, 5% Foreign Income, 20% Real Estate, 5% Foreign Equities, Equities,
Objective: Growth vs. IncomeObjective: Growth vs. Income LiquidityLiquidity
Financial Market Financial Market PerformancePerformance
Political StabilityPolitical Stability Government PoliciesGovernment Policies Economic indicators, GDP, Balance of Payment, Economic indicators, GDP, Balance of Payment,
Inflation, UnemploymentInflation, Unemployment War, Natural CalamitiesWar, Natural Calamities Corporate PerformanceCorporate Performance Inter-linkages of World MarketsInter-linkages of World Markets Future OutlookFuture Outlook Consumer ConfidenceConsumer Confidence Expectation of YieldExpectation of Yield Investor SentimentInvestor Sentiment
Financial Market: RisksFinancial Market: Risks
Country/Currency RiskCountry/Currency Risk Market Risk Market Risk Credit RiskCredit Risk Counterparty RisksCounterparty Risks Settlement RiskSettlement Risk Operational RiskOperational Risk Proper Setting up of Limits and Proper Setting up of Limits and
Monitoring of exposures is necessaryMonitoring of exposures is necessary
Corporate ResultsCorporate Results
Earnings StatementEarnings Statement IncomeIncome ExpenseExpense
Balance SheetBalance Sheet Assets – What business ownsAssets – What business owns Liabilities – What business owesLiabilities – What business owes Shareholders’ EquityShareholders’ Equity
Cash Flow StatementCash Flow Statement
Valuation of Stocks?Valuation of Stocks?
Fundamental Fundamental AnalysisAnalysis
Technical AnalysisTechnical Analysis EPSEPS PE RatioPE Ratio Projected EPSProjected EPS DividendDividend SplitSplit Ex-DateEx-Date
Fundamental AnalysisFundamental Analysis Company LevelCompany Level
Is the company’s revenue growing? Is the company’s revenue growing? Are company’s products and services of high quality?Are company’s products and services of high quality? Is it actually making a profit? Is it actually making a profit? Is it in a strong-enough position to beat its competitors Is it in a strong-enough position to beat its competitors
in the future? in the future? Is it able to repay its debt? Is it able to repay its debt? Is management team good? Is management team good?
Industry LevelIndustry Level What is the Market Share of the company?What is the Market Share of the company? What is the growth rate of the industry?What is the growth rate of the industry? How is the Competition within the industry and what How is the Competition within the industry and what
are the competitive advantages?are the competitive advantages? Is the Govt. Regulation likely to affect the company’s Is the Govt. Regulation likely to affect the company’s
growth and profitability?growth and profitability?
Technical AnalysisTechnical Analysis Technical analysisTechnical analysis is is
the study of past financial the study of past financial market data, primarily market data, primarily through the use of charts, through the use of charts, to forecast price trends to forecast price trends and make investment and make investment decisions. In its purest decisions. In its purest form, technical analysis is form, technical analysis is concerned only with the concerned only with the actual price behavior of actual price behavior of the market or instrument, the market or instrument, based on the premise that based on the premise that price reflects all relevant price reflects all relevant factors before an investor factors before an investor becomes aware of them becomes aware of them through other channels.through other channels.
How is Bond Price How is Bond Price Calculated?Calculated?
Yield CurveYield Curve
Yield Vs Price Yield Vs Price relationshiprelationship Price is inversely Price is inversely
proportional to yieldproportional to yield
Credit RatingsCredit Ratings Higher the risk the Higher the risk the
investor takes, investor takes, he/she expects he/she expects higher returnshigher returns
How is a Trade ExecutedHow is a Trade Executed
Buyer
Bank of Buyer’s Broker
Seller
Bank of Seller’s Broker
Stock Exchang
e
Depository
Buyer’s Broker
Seller’s Broker
Order
Order
Order
Executed Trade
Executed Trade
Clearing House
Pays cost of Buy
Receives Sell Proceeds
Security Balance reduced
Security Balance increased
Pays money
Gets shares
Gets money
Gives shares
Classification of MarketsClassification of Markets By Type/Maturity of By Type/Maturity of
InstrumentsInstruments Money Market-Instrument Money Market-Instrument
with maturity 1 year or lesswith maturity 1 year or less Capital Market-All other Capital Market-All other
instruments with > 1 year instruments with > 1 year maturitymaturity
Foreign Exchange or Local Foreign Exchange or Local CurrencyCurrency
Stock MarketStock Market Bond MarketBond Market
Based on How Trade is doneBased on How Trade is done Primary MarketPrimary Market Secondary MarketSecondary Market Inter-bank MarketInter-bank Market Over the Counter (OTC)Over the Counter (OTC)
Electronic Trading PlatformsElectronic Trading Platforms
Primary MarketPrimary Market New IssuesNew Issues
Initial Public Offering Initial Public Offering Private PlacementsPrivate Placements
Issuer sells the new securities for the first Issuer sells the new securities for the first time to Investors either directly or through time to Investors either directly or through Brokers Brokers
Investment BankerInvestment Banker ProspectusProspectus Subscriptions at the Issue Price fixed by Subscriptions at the Issue Price fixed by
the Issuer or Bids are submitted in an the Issuer or Bids are submitted in an AuctionAuction
Secondary MarketSecondary Market Subsequent trading of financial Subsequent trading of financial
instruments among investorsinstruments among investors Usually through an organized market, Usually through an organized market,
such as stock exchange, inter-bank such as stock exchange, inter-bank market, OTC market, etc.market, OTC market, etc.
Issuer is not affected in the process. Issuer is not affected in the process. Number of outstanding shares or debt Number of outstanding shares or debt does not changedoes not change
Issuer must record the change in Issuer must record the change in ownership to payout distributions/effect ownership to payout distributions/effect corporate actions corporate actions
Over the Counter (OTC)Over the Counter (OTC) OTCOTC trading is to trade financial trading is to trade financial
instruments such as stocks, bonds, instruments such as stocks, bonds, commodities, derivatives, etc., directly commodities, derivatives, etc., directly between two parties. It is the opposite of between two parties. It is the opposite of exchange trading which happens on an exchange trading which happens on an organized exchange, such as Stock organized exchange, such as Stock Exchange or Commodities Exchange.Exchange or Commodities Exchange.
An OTC Contract is a bilateral contract in An OTC Contract is a bilateral contract in which two parties agree on how a which two parties agree on how a particular trade or agreement is to be particular trade or agreement is to be settled in the future.settled in the future.
Securities TransactionSecurities Transaction
To Open a New PositionTo Open a New Position Buy-to open a Long PositionBuy-to open a Long Position Short Sell-to open a Short PositionShort Sell-to open a Short Position
To Close an existing positionTo Close an existing position Sell to close a long positionSell to close a long position Buy to Cover a short positionBuy to Cover a short position
Position-Exposed to RiskPosition-Exposed to Risk Due to price movements, Unrealized Due to price movements, Unrealized
Gain LossGain Loss
Settlement of Settlement of TransactionsTransactions
Happens on Happens on Settlement Date Settlement Date (T+3)(T+3)
Payment for TradePayment for Trade Buyer pays and seller Buyer pays and seller
gets moneygets money Delivery of SecuritiesDelivery of Securities Seller delivers and Seller delivers and
buyer receives buyer receives deliverydelivery
Delivery Vs. PaymentDelivery Vs. Payment
TransactioTransactionn
How settles?How settles?
BUYBUY Pay settlement amountPay settlement amount
Receive SecuritiesReceive Securities
SELLSELL Deliver SecuritiesDeliver Securities
Receive settlement Receive settlement amountamount
SHORT SHORT SELLSELL
Deliver Securities Deliver Securities (borrow securities from (borrow securities from the broker)the broker)
Receive settlement Receive settlement amountamount
BUY TO BUY TO COVERCOVER
Pay Settlement AmountPay Settlement Amount
Receive Securities (give Receive Securities (give back securities to the back securities to the broker to extinguish broker to extinguish the short position)the short position)
Corporate ActionsCorporate Actions
Corporate Actions Corporate Actions are actions of issuers are actions of issuers that usually result that usually result into benefits for the into benefits for the investorsinvestors
Some of the Some of the Corporate Action are Corporate Action are mandatorymandatory
In a Voluntary In a Voluntary Corporate Action the Corporate Action the Investor Investor
TypeType MandatoMandatoryry
VoluntaryVoluntary
EquitEquityy
DividendDividend
SplitSplit
MergerMerger
Spin-offSpin-off
RightsRights
Tender offersTender offers
DebtDebt Interest Interest PaymentPayment
MaturityMaturity
PutPut
Transaction Flow-Exchange Transaction Flow-Exchange Traded Traded
Buyer
Bank of Buyer’s Broker
Seller
Bank of Seller’s Broker
Stock Exchang
e
Depository
Buyer’s Broker
Seller’s Broker
Order
Order
Order
Executed Trade
Executed Trade
Clearing House
Pays cost of Buy
Receives Sell Proceeds
Security Balance reduced
Security Balance increased
Pays money
Gets shares
Gets money
Gives shares
Transaction Flow-OTCTransaction Flow-OTC
Buyer Seller
Buyer’s Custodian
Seller’s Custodian
Trade
Contract Confirmation
DI P
DI S
Broker
Trade Settlement
Securities Systems-Buy Securities Systems-Buy SideSide
RoleRole Example of SystemsExample of Systems
Front Front OfficOfficee
Fund Fund ManagementManagement
Trading Trading DecisionsDecisions
Market Data FeedsMarket Data Feeds
Trading SystemsTrading Systems
Order Allocation SystemsOrder Allocation Systems
MiddMiddle le OfficOfficee
AuditAudit
SecuritySecurity
ControlControl
Exception Exception RatificationRatification
Compliance SystemsCompliance Systems
Contract Confirmation MatchingContract Confirmation Matching
Trade Rate Reasonableness CheckingTrade Rate Reasonableness Checking
Exception ManagementException Management
Back Back OfficOfficee
SettlementSettlement
AccountingAccounting
Processing Processing
ReportingReporting
Reference Data ManagementReference Data Management
Settlement SystemsSettlement Systems
Accounting SystemsAccounting Systems
ReconciliationReconciliation
Client Reporting SystemsClient Reporting Systems
Securities Systems- System Design Securities Systems- System Design ConsiderationsConsiderations
Mission Critical SystemsMission Critical Systems Billions of dollars are involvedBillions of dollars are involved Errors can cause tremendous financial losses and damage reputationErrors can cause tremendous financial losses and damage reputation May involve PenaltiesMay involve Penalties
Availability & ReliabilityAvailability & Reliability Up TimeUp Time AccuracyAccuracy Disaster RecoveryDisaster Recovery
Secure EnvironmentSecure Environment User Access ControlUser Access Control Audit Trail-Log of Activities performed, Exceptions raisedAudit Trail-Log of Activities performed, Exceptions raised Pin-point responsibility to a single userPin-point responsibility to a single user 4 eyes principal4 eyes principal Log of Changes-Old Value and New Value, Change HistoryLog of Changes-Old Value and New Value, Change History
Scalability, Throughput and System PerformanceScalability, Throughput and System Performance Ability to handle large volume Ability to handle large volume Quick Response TimeQuick Response Time
Global UsageGlobal Usage 24 X 724 X 7 Support Multiple Time ZonesSupport Multiple Time Zones Multi-Currency ProcessingMulti-Currency Processing
Securities Systems-Pains & Securities Systems-Pains & OpportunitiesOpportunities
Legacy Systems on Main-frame in COBOL are difficult to replace and Legacy Systems on Main-frame in COBOL are difficult to replace and maintainmaintain
Disparate Systems make Integration DifficultDisparate Systems make Integration Difficult Separate Systems for Front, Middle & Back-officeSeparate Systems for Front, Middle & Back-office Specialized Systems for Equities, Fixed Income, FXSpecialized Systems for Equities, Fixed Income, FX Multiple Systems due to Mergers & AcquisitionsMultiple Systems due to Mergers & Acquisitions
Multiple Systems having same Reference DataMultiple Systems having same Reference Data Multiple Sources of dataMultiple Sources of data Differences and reconciliationDifferences and reconciliation
Integration with Multiple Market Data Feeds Integration with Multiple Market Data Feeds Dynamically Changing MarketsDynamically Changing Markets
GlobalizationGlobalization New Financial ProductsNew Financial Products
Use of changing TechnologyUse of changing Technology High level of Technological Sophistication is soughtHigh level of Technological Sophistication is sought Use technology for a competitive advantageUse technology for a competitive advantage Prefer proven systems but yet embrace the latest technology earlyPrefer proven systems but yet embrace the latest technology early
Big BudgetsBig Budgets Financial Market Players have big IT budgetsFinancial Market Players have big IT budgets They are first to hire in a good economy and first to fire when things go badThey are first to hire in a good economy and first to fire when things go bad Risk of failure when stakes are high and scope is vastRisk of failure when stakes are high and scope is vast