Investment banking

• The financial services sector provides the link between organisations needing capital and those with capital available for investment
• Wholesale/professional/institutional sector


  Activities include equity markets, bond markets, foreign exchange, derivatives, and insurance markets. Also includes fund management, investment banking, and custodian banking.
• Retail sector


  Focuses on services provided to personal customers, including retail banking, insurance, pensions, investment services, and financial planning/advice.
• Activities in the wholesale financial markets

  • Equity markets
  • Bond markets
  • Foreign exchange
  • Derivatives
  • Insurance markets
• Other activities in the wholesale sector

  • Fund management
  • Investment banking
  • Custodian banking
• Services provided in the retail sector

  • Retail banking
  • Insurance
  • Pensions
  • Investment services
  • Financial planning and financial advice
• The Global Financial Centres Index evaluates the rankings and future competitiveness of 111 major financial centres based on business environment, human capital, infrastructure, financial sector development, and reputation
• The Global Financial Centres Index 30 (GFCI 30) published in 2022 showed that New York retained its number one place in the rankings, with London not far behind
• Services provided to personal customers

  • Retail banking
  • Insurance
  • Pensions
  • Investment services
  • Financial planning and financial advice
• Equity markets


  Stock markets where the ordinary and preferred shares of companies are traded
• Global market capitalisation was over US$100 trillion at the end of 2022
• Global market capitalisation


  • The total value of shares quoted on the world's stock exchanges
• Key statistics on the equity markets as at the end of 2022


  • The New York Stock Exchange (NYSE) was the largest exchange in the world, with a domestic market capitalisation of over US$24 trillion
  • The Nasdaq was ranked as the second largest, with a domestic market capitalisation of around US$16 trillion
  • The Shanghai Stock Exchange (SSE) is now the world's third largest exchange, with a domestic capitalisation of over US$6 trillion
  • The Shenzhen Stock Exchange (SZSE) is the sixth largest exchange, with a domestic market capitalisation of over US$4 trillion
  • Japan Exchange Group, which includes the Tokyo Stock Exchange (TSE), is the world's fifth largest market, with a domestic market capitalisation of over US$5 trillion
  • In Europe, the largest exchanges are the London Stock Exchange (LSE), Euronext, SIX Swiss Exchange and Deutsche Börse AG
  • In the Middle East, Tadawul – the Saudi Stock Exchange is the largest exchange, with a domestic market capitalisation of over US$2.5 trillion
• Multilateral trading facilities (MTFs)


  Systems that bring together multiple parties that are interested in buying and selling financial instruments including shares, bonds and derivatives
• Bond markets


  Allow governments and companies to raise loans or debt finance directly from investors and then facilitate the subsequent secondary trading of the debt securities created
• The amounts outstanding on the global bond market now exceed US$128 trillion, according to the International Capital Market Association (ICMA)
• Composition of the global bond market

  • Sovereign, supranational and agency (SSA) debt accounts for 68%
  • Corporate bonds make up the remaining 32%
• Although the US has the largest bond market, trading in international bonds is predominantly undertaken in European markets
• Foreign exchange (FX) markets

  The global marketplace that determine the exchange rates for currencies around the world, and where one currency is traded for another
• FX markets are the largest of all financial markets, with an average daily turnover of approximately US$7.5 trillion, a volume 30 times greater than daily global GDP
• Over-the-counter (OTC) market


  A market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house
• Main locations for FX trading

  • UK
  • US
  • Asia
• FX Trading by Type of Instrument

  • Spot transactions (28%)
  • Outright forwards (16%)
  • FX swaps (50%)
  • Currency swaps (2%)
  • FX options and other products (4%)
• Derivatives markets


  Trade a range of complex products based on underlying instruments, including currencies, indices, interest rates, equities, commodities and credit risk
• Based on the value of the notional amounts outstanding, the OTC derivatives markets worldwide are about four times the size of stock quoted on stock exchanges
• Main segments of the derivatives markets

  • Interest rate derivatives
  • FX derivatives
  • Equity-linked contracts
  • Credit derivatives
  • Commodity contracts
• Insurance markets


  Specialise in the management of personal risk, corporate risk and protection of life events
• Five Largest Insurance Markets in 2021 (ranked by total premium volume)

  • US
  • China
  • Japan
  • UK
  • France
• Lloyd's


  The world's specialist insurance market and historically referred to as Lloyd's of London
• Lloyd's is not an insurance company but a marketplace that brings together a range of insurers, both individuals and companies, each of whom accepts insurance risks as a member of one or more underwriting syndicates
• Less well known to the general public is the reinsurance industry, where insurers protect themselves by using reinsurance companies
• Some of the largest reinsurers in the world

  • Munich Re
  • Swiss Re
  • Hannover Re
  • Berkshire Hathaway
  • Lloyd's
• Participants in the financial services sector

  • Retail/commercial banks
  • Savings institutions
  • Investment banks
  • Private banks
  • Pension funds
  • Insurance companies
  • Fund managers
  • Stockbrokers
  • Custodians
  • Platforms
  • Third-party administrators (TPAs)
  • Industry trade and professional bodies
  • Sovereign wealth funds
  • Peer-to-peer/crowdfunding
• Investment banks


  Provide advice and arrange finance for companies that want to float on the stock market, raise additional finance by issuing further shares or bonds, or carry out mergers and acquisitions
• Services provided by investment banks

  • Finance-raising and advisory work
  • Securities-trading in equities, bonds and derivatives
  • Treasury dealing for corporate clients
  • Investment management for sizeable investors
• Custodians


  Banks that specialise in safe custody services, looking after investments such as shares and bonds on behalf of others, such as fund managers, pension funds and insurance companies
• Activities undertaken by custodians

  • Holding assets in safekeeping
  • Arranging settlement of any purchases and sales of securities
  • Asset servicing
  • Providing information on the underlying companies and their annual general meetings (AGMs)
  • Managing cash transactions
  • Performing FX transactions
  • Providing regular reporting
• Retail/commercial banks


  Financial institutions that provide services, such as taking deposits from, and lending funds to, retail customers, as well as providing payment and money transmission services
• Financial conglomerates


  Groups of companies under common control whose exclusive or predominant activities consist of providing significant services in at least two different financial sectors (banking, securities, insurance)
• Challenger banks


  Smaller banks, specialising in areas underserved by large, traditional banks, and which distinguish themselves from historic banking by deploying modern financial technology with no community branches