MindMap Gallery Chapter 1 Financial Market System Section 2 Global Financial Market
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Edited at 2023-12-06 13:42:19Avatar 3 centers on the Sully family, showcasing the internal rift caused by the sacrifice of their eldest son, and their alliance with other tribes on Pandora against the external conflict of the Ashbringers, who adhere to the philosophy of fire and are allied with humans. It explores the grand themes of family, faith, and survival.
This article discusses the Easter eggs and homages in Zootopia 2 that you may have discovered. The main content includes: character and archetype Easter eggs, cinematic universe crossover Easter eggs, animal ecology and behavior references, symbol and metaphor Easter eggs, social satire and brand allusions, and emotional storylines and sequel foreshadowing.
[Zootopia Character Relationship Chart] The idealistic rabbit police officer Judy and the cynical fox conman Nick form a charmingly contrasting duo, rising from street hustlers to become Zootopia police officers!
Avatar 3 centers on the Sully family, showcasing the internal rift caused by the sacrifice of their eldest son, and their alliance with other tribes on Pandora against the external conflict of the Ashbringers, who adhere to the philosophy of fire and are allied with humans. It explores the grand themes of family, faith, and survival.
This article discusses the Easter eggs and homages in Zootopia 2 that you may have discovered. The main content includes: character and archetype Easter eggs, cinematic universe crossover Easter eggs, animal ecology and behavior references, symbol and metaphor Easter eggs, social satire and brand allusions, and emotional storylines and sequel foreshadowing.
[Zootopia Character Relationship Chart] The idealistic rabbit police officer Judy and the cynical fox conman Nick form a charmingly contrasting duo, rising from street hustlers to become Zootopia police officers!
Chapter 1 Financial Market System Section 2 Global Financial Market
3. U.S. Financial Markets
The United States is the largest economy in the world today, and its financial industry also occupies a global hegemony.
(1) U.S. foreign exchange market
The US dollar is the most important convertible currency in the world today, and the United States has become the world's second largest foreign exchange market after the United Kingdom. Among foreign exchange transactions conducted in the U.S. market, 73% of counterparties are located outside the United States. It can be seen that the U.S. foreign exchange market is a highly international market, and its radiation and influence are global.
(2) U.S. interbank capital market and federal funds rate
1. Reasons for inter-bank lending
Depository financial institutions are subject to statutory deposit reserve policy restrictions and are required to adjust the amount of statutory deposits payable every day based on the amount of deposits. 18 types of reserves. Therefore, adjusting the surplus and shortfall of funds has become an important part of the daily management work of depository financial institutions, and this has resulted in the creation of a huge inter-bank short-term capital market.
2. U.S. federal lending rate
In the United States, the reserves deposited by banks are stored in the Federal Reserve Bank account. Therefore, the adjustment of the reserve balance is called For federal funds lending, the resulting interbank lending market is called the federal funds market, and the interbank unsecured short-term The borrowing rate is called the federal funds rate. The federal funds rate is the most important monetary policy operational target in the Federal Reserve system. Any time the Fed adjusts the federal Decisions on the funds rate will be quickly transmitted to the U.S. financial market, and in turn cause chain reactions in major markets around the world. It can be said that it is one of the most influential interest rate indicators in the world.
(3) The U.S. stock market (the most developed in the world)
1. Stock trading venues (category 3)
In recent years, the situation of various stock trading venues in the United States has changed significantly. Listed stocks may not necessarily be traded on the exchange where they are listed. A complex trading system was formed.
national stock exchange
1. Registered by the U.S. Securities and Exchange Commission, there were 21 national stock exchanges as of the end of 2017. 2. Not every exchange among these exchanges has its own initially listed companies. However, most stocks listed on other exchanges can be listed and traded, and the competition between them is very fierce. fierce. 3. At present, it is roughly Intercontinental Exchange Group (ICE Group), Nasdaq Group (NASDAQ Group) and Chicago Board Options Exchange Group (CBOE Group) are evenly divided
Alternative Trading System (ATS)
1. Concept: Also registered by the U.S. Securities and Exchange Commission, it is "in compliance with the federal securities laws regarding exchange regulations." righteousness, but not registered as a trading system of a national exchange” 2. Features: The difference between alternative trading systems and exchanges is that in addition to organizing transactions, exchanges It is also a self-regulatory agency, while alternative trading systems do not have self-regulatory authority over market participants. legal supervision functions. 3. Operation mode (divided according to the transparency of market quotations) (1) Electronic Communication Network (ECN): The quotation is highly transparent and is provided in its comprehensive quotation data. Best price order, similar to exchange. (2) "Dark Pool": It is provided for institutional investors with large transaction scale. A system that does not disclose quotation and transaction information to the outside world in order to avoid large-scale trading pairs. Impact on market prices and reduce transaction costs. In other words, the "dark pool" trading system comprehensive The best price order is not necessarily disclosed in the quotation data. ‘Dark pool’ trading pairs facilitate block trades It has positive meanings, but its opaque characteristics can easily lead to violations. Regulatory cases in this area have emerged one after another in recent years, and several well-known financial institutions have been subject to regulatory penalties for this.
Broker-dealer internal matching (BrokerHealer)
When a broker-dealer accepts customer orders, if the internal customer's order is better than the exchange or ATS quotation, broker-dealer can internally match the customer's buying and selling orders into This part of trading volume is not included in the trading statistics of listed securities on that day.
2. Nasdaq Group
(1 Introduction
NASDAQ, originally the National Association of Securities Dealers (NASD) automatic quotation system, mainly operates in the market External Stock Exchange, established in 1971 by NASD, is a wholly-owned subsidiary of NASD. NASD was reorganized in 2007 to become the National The Financial Industry Regulatory Authority (FINRA) is currently the self-regulatory agency of the U.S. securities industry, but it is still a private enterprise. Currently, Nasdaq Group operates three national stock exchanges in the United States, namely the Nasdaq Stock Market (NASDAQ Stock Market), NASDAQ Boston (NASDAQ BX) and NASDAQ Philadelphia (NASDAQ PSX). Among them, the Nasdaq stock market is currently the single exchange with the largest spot trading volume of U.S. stocks. In 2016, the trading volume accounted for 14% of U.S. stock spot volume.
(2) Stratification of Nasdaq stock market
The Nasdaq market has experienced two stratifications in its history - the first stratification was carried out in 1982 and was divided into Nasdaq National market and the Nasdaq regular market; in 2006, the Nasdaq tiering system was improved again and divided into three sections, namely Nasdaq NASDAQ Global Select Market, NASDAQ Global Market) and NASDAQ Capital Market.
Nasdaq Global Select Market
Serving companies with high market capitalization around the world and attracting high-quality blue-chip companies from around the world A high-quality enterprise transferred from the industry and Nasnak Global Market, it has become a company with relatively high listing standards. High blue chip market.
Nasdaq Global Market
Mainly serving medium-sized enterprises with certain growth potential.
Nasdaq Capital Market
Mainly provides financing channels for small businesses.
(3) Trading mechanism of Nasdaq market
Currently, the trading mechanism adopted by the Nasdaq market is a combination of order-driven (price-first, time-priority bidding transactions). It is a hybrid trading model of two modes: trading) and quotation-driven (market maker model). In December 2017, for example, the average number of Market Securities has more than 13 market makers and competition is fierce, which plays an important role in maintaining market depth and liquidity.
3. New York Stock Exchange
(1 Introduction
The New York Stock Exchange is currently part of the Intercontinental Exchange Group. As of the end of 2017, Intercontinental Exchange Group (ICE) owned 6 futures exchanges, 4 stock exchanges, 2 options exchanges, 5 OTC markets and 7 clearing companies. Among them, four exchanges (NYSE, NYSEArea, NYSE America and NYSE National) operated by its subsidiary NYSE Group are qualified for stock trading, but NYSE National has not yet restarted trading since its acquisition in 2017.
(2) Characteristics of transaction system model (3)
Designated Market Maker System (DMM)
Unlike Nasdaq’s competitive market maker system, the New York Stock Exchange (NYSE) and NYSE America Use a smaller number of designated market makers. As of the end of 2017, the New York Stock Exchange had five designated market makers, NYSE American There are three electronic designated market makers
floor broker system
The New York Stock Exchange trading floor is divided into 17 trading stations, each trading station has fixed trading specific types of securities. Representatives of the 5 designated market makers are stationary at the trading station. All member companies of the exchange (152 including DMM) can dispatch floor brokers to the floor of the New York Stock Exchange People, floor brokers can move around each trading station, using handheld quotation equipment and computer network quotations. Terminal or programmed trading means place orders on behalf of customers. Although with the advancement of electronic trading, the role of floor brokers has weakened, but for large customers For them, having a floor broker is still an important reason for them to choose a broker.
Supplementary liquidity provider system
To maintain market liquidity and facilitate more transactions, the New York Stock Exchange selects among member companies The few members with large electronic trading volumes serve as supplementary liquidity providers (SLPs). These dealers are obliged to provide two-way quotations for the securities for which they are responsible through proprietary accounts and must It must be guaranteed that for more than 10% of the trading days, the quotation will be the National Best Bid (NBBO). Supplementary liquidity providers only have the same trading information channels as ordinary customers, but for them The transaction part, if it meets the exchange’s quantity requirements (average daily trading volume of 10 million shares), You will get higher rebates. The 5 designated market makers can also serve as supplementary liquidity providers. However, for the same security, no Can serve as both a designated market maker and a supplementary liquidity provider
(4) U.S. bond market (the largest in the world)
U.S. Treasury market
1. Concept: Bonds issued by the U.S. federal government are collectively called U.S. Treasury bonds, and U.S. Treasury bonds are the U.S. bond market. Cornerstone. 2. Characteristics: Under normal circumstances, there is basically no default risk in local currency bonds issued by the central government, so this type of Bonds are regarded as "risk-free assets", and their yields are also regarded as "risk-free rates of return" by financial markets. Have a significant impact on the pricing and trading of other financial assets. 3. Classification: According to different maturities, U.S. Treasury bonds with a maturity of less than 1 year are called Treasury bills (T-Bills). Those with more than 1 year and less than 10 years are called treasury bills (T-Notes), and those with more than 10 years are called government notes. Debt (T-Bonds). In addition, according to the characteristics of Treasury bonds, U.S. Treasury bonds also include Inflation-Protected Securities (TIPs), Floating rate Treasury notes (FRNs) and other categories
U.S. federal agency bond market
U.S. federal agency bonds actually generally refer to bonds issued by two types of agencies:
Bonds issued or guaranteed by U.S. federal government agencies
Such as the National Mortgage Association (Ginnie Mae or GNMA), which is a U.S. federal government A wholly government-owned company under the Department of Housing and Urban Development, the mortgage loans issued by it Mortgage-backed securities are currently the only mortgage-backed securities in the United States that enjoy a central government credit rating. Hold securities.
Bonds issued by government-backed enterprises (GSEs)
For example, Fannie Mae and Freddie Mac are typical examples of government-backed enterprises, but their bonds carry credit risks, and the central government does not The repayment of principal and interest is not guaranteed.
U.S. municipal bond market
1. Concept: Municipal Bonds are bonds issued by states and local governments (cities, towns, counties and school district) or its affiliated agencies (bureaus and agencies such as housing, health care, airports, ports, and economic development) institutions). 2. Purpose: To raise funds for a variety of municipal projects, provide cash flow, and satisfy other aspects of the government need. Some states even use this "channel" to raise funds for non-governmental private projects. 3. Sources of principal and interest repayment: the issuer’s general tax revenue, specific tax revenue, public project revenue or private industry Individual reimbursement can also be a combination of these multiple sources.
U.S. corporate bond market
There are many types of corporate bonds in the United States, which are divided into two types: bonds issued by public offerings and bonds issued by private placements. The U.S. Securities and Exchange Commission stipulates that securities raised from less than 35 specific investors are private placement bonds and are not subject to the U.S. Securities and Exchange Commission. According to regulatory restrictions, about one-third of companies use private placement to issue bonds.
(5) U.S. Derivatives Market
The United States has the largest derivatives market in the world, with Chicago and New York being the places where derivatives trading is most concentrated. 20th century Since the 1980s, most new derivatives have originated in the United States.
(6) Financial market supervision in the United States
Since the Great Crisis of 1929-1933, the United States has implemented a “double-tiered multi-leader” financial regulatory system. The so-called "double layer", It means that there are financial regulatory authorities at both the federal and state levels; "multiple" means that multiple regulatory agencies have been established to perform different regulatory responsibilities. After the 2008 financial crisis, this system is in the process of reform and improvement.
1. Federal and state dual-level regulation
(1) Law (the U.S. Congress, state and local Congresses all have legislative power)
federal securities laws
Securities Act of 1933, Securities Exchange Act of 1934, Investment Company Act of 1940, The Investment Advisers Act of 2010, the Dodd-Frank Act of 2010, etc.
state level laws
In addition to securities laws, state corporate laws, bankruptcy laws, internal revenue laws, etc., in many cases It is also a supplement to securities laws
(2) Regulatory agencies
Federal level regulatory agencies
United States Federal Reserve System (FEI)), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Securities and Exchange Commission (SEC), and Commodities Futures Trading Commission (CFTC)
State-Level Regulatory Agencies
State banking regulators, securities regulators, and insurance regulators
Cross-departmental supervision mechanism
Federal Financial Institutions Examination Council (FFIEC) and President’s Working Group on Financial Markets (PWG).
2. Separate supervision system
(1) Background
After the Great Crisis of 1929-1933, the U.S. Congress passed the Glass-Steagall Act, establishing the With the separation of banking and investment banking, regulatory agencies have been set up for industries or functions.
(2) Banking regulatory agencies
office of the comptroller of the currency
1. Affiliated to: U.S. Department of the Treasury. 2. Function: Supervise federally registered banks (national banks) in the United States. Specific supervisory functions include: inspection; review and approval of applications for establishment of branches, changes in capital, etc. by supervisory objects; Take supervisory measures for their illegal activities or unsound business operations; formulate and issue relevant bank regulations Regulations on investments, loans and other operations.
federal reserve system
Function: Mainly responsible for formulating monetary policy and supervising its member banks and financial holding companies. management, in addition to financial stability and financial services functions
Federal Deposit Insurance Corporation
1. Objective: By protecting deposits in banks and savings institutions, supervising insured institutions, and prosecuting bankrupt institutions. Bank takeover, etc. to maintain the stability of the financial system and public confidence. 2. Function: Responsible for the primary supervision of insured non-Federal Reserve member state banks, as well as other insured of banks and thrifts have auxiliary supervisory responsibilities
Office of Thrift Institutions Supervision
Function: Mainly responsible for the supervision of savings associations and their holding companies
National Credit Union Administration
Function: Mainly responsible for issuing and supervising federal credit union licenses, and using the National Credit Union The cooperative insurance fund holds savings deposits at all federal credit unions and most state credit unions be protected.
[Note] The Federal Financial Institutions Examination Committee, as the coordinating agency of the above five regulatory agencies, is mainly responsible for formulating unified regulatory guidelines and reporting formats, etc.
(3) Securities industry regulatory agencies
Ministry of Finance
Responsibilities: Responsibilities for regulating the entire government bond market, specifically regulating government bond brokers and transactions traders’ trading practices to protect investors and establish a fair, just and liquid market.
Municipal Bond Decision Committee (MSRB)
1. Nature: The Municipal Bond Decision-making Committee is a self-regulatory organization and is supervised by the Securities and Exchange Commission. 2. Responsibilities: Issue relevant regulatory regulations, that is, supervise the underwriting, trading and sales of securities companies and banks Regulations on Municipal Bonds, etc.
Securities and Exchange Commission (SEC)
1. Institutions required to submit registration applications to the SEC: issuers of public offerings of securities; companies listed on exchanges; utility holding companies (unless exempt). 2. Institutions, persons or activities subject to SEC supervision: trust institutions; investment companies; investment consultants; and exchange members’ related trading activities. 3. Under normal circumstances, a registered company's issuance and sale of securities, purchase of securities and assets of other companies, and transactions with its affiliates require prior approval from the Securities and Exchange Commission. 4. Other systems: Securities and Exchange Commission hearing system and reporting system for bankrupt companies
Financial Industry Regulatory Authority (FINRA)
1. Nature: Self-regulatory organization of the securities industry. 2. Responsibilities: Responsible for supervising the business between brokers, traders and the investing public.
Commodity Futures Trading Commission
Responsibilities: Responsible for regulating U.S. futures and options markets
(4) Insurance regulatory agencies
Insurance regulatory responsibilities in the United States are mainly undertaken by state insurance regulatory bureaus, including daily market access, monitoring and inspections, etc. Supervision. In addition, state insurance regulators jointly established the National Association of Insurance Regulators (NAIC) in 1987 to serve as the agency for state insurance regulators. Auxiliary regulatory agency of the Authority
(5) Reflections on the 2008 financial crisis
Strengthen supervision
On July 21, 2010, U.S. President Obama officially signed the Dodd-Frank Act, striving to Strengthen macro-prudential supervision, improve regulatory standards, establish self-rescue mechanisms, strengthen shadow banking supervision, Reform financial supervision in aspects such as reforming the securities market and strengthening consumer protection.
deregulation
However, critics believe that the Dodd-Frank Act has significantly increased the operating costs of financial institutions and has It has severely restricted the investment and financing activities in the financial industry, and at the same time, it has also prevented some investment and financing needs from being well addressed. satisfy. On March 14, 2018, the U.S. Senate passed the “Promoting Economic Growth, Relaxing Regulatory Requirements, and Protecting "Consumer Rights Act", the amendments to the bill mainly involve reducing the financial regulatory burden on small banks, relaxing Loosening financial regulatory requirements for some medium-sized banks, etc., can be roughly considered to be a revision of the Dodd-Frank Act. A correction.
4. Financial Market of Hong Kong, China
The Hong Kong Special Administrative Region of China is a world-famous financial center with a developed financial market, especially in connecting the mainland and Played an important role in international financial markets
(1) Linked exchange rate system
At present, most countries in the world use legal tender currencies issued by central banks. Hong Kong Special Administrative Region of China None The central bank, since 1983, has maintained a peg to the U.S. dollar, a currency board system. according to According to the provisions of the currency board system, the flow and stock of base currency must be fully supported by foreign exchange reserves. In other words, Any changes in the monetary base must be consistent with corresponding changes in foreign exchange reserves. The linked exchange rate system of Hong Kong, China ensures the basic stability of the value of the Hong Kong dollar and is conducive to the healthy development of Hong Kong’s financial market. important role.
[Tips 1] In Hong Kong, China, the components of the base currency include: (1) Issued certificates of indebtedness (used to back bank notes) and banknotes and coins issued by the government; (2) Total settlement account balances of licensed banks with the Hong Kong Monetary Authority (hereinafter referred to as the HKMA); (3) Total outstanding Exchange Fund bills and bonds. [Tip 2] According to the laws of Hong Kong, China, most Hong Kong dollars are issued by three note-issuing banks, namely HSBC, Standard Chartered Bank, Issued by Bank of China (Hong Kong). When the note-issuing bank issues banknotes, it must submit to the Hong Kong Monetary Authority an exchange rate of HK$7.80 to US$1, etc. value in US dollars and credited to the Exchange Fund's accounts to purchase certificates of indebtedness to back its banknotes. Instead, recycling When Hong Kong dollar banknotes are exchanged, the Hong Kong Monetary Authority will redeem the certificate of indebtedness, and the bank will withdraw the equivalent US dollar value from the Exchange Fund. by the Hong Kong Government of China Banknotes and coins issued by the Hong Kong Monetary Authority are stored and distributed to the public by agent banks. The relationship between the Hong Kong Monetary Authority and agent banks The transactions were also settled in U.S. dollars at an exchange rate of HK$7.80 to the U.S. dollar.
(2) Foreign exchange market in Hong Kong, China
1. Mainly OTC transactions.
2. Relying on the institutional advantages of “one country, two systems”, Hong Kong, China, has gradually become a global As the center of the RMB offshore market, about 70% of RMB cross-border business is conducted through the Hong Kong foreign exchange market.
(3) Development of the stock market in Hong Kong, China
In 1891, the Hong Kong Stockbrokers Association was established as the first stock exchange in Hong Kong, and in 1914 it was renamed the Hong Kong Stock Exchange. After the 1950s, Hong Kong's economy took off and three stock exchanges were established, namely the Far East Exchange. (1969), Bullion Stock Exchange (1971), Kowloon Stock Exchange (1972). In 1986, four stock exchanges merged to form the Stock Exchange of Hong Kong. In 2000, the Stock Exchange of Hong Kong and the Hong Kong Mercantile Exchange were demutualized and merged with the Hong Kong Clearing House into a single A holding company owned by Hong Kong Exchanges and Clearing Limited, it was listed on the Stock Exchange of Hong Kong in June
[Tips] In addition to spot trading of stocks, the Hong Kong Stock Exchange also provides bonds, funds, real estate investment trusts and derivatives. 25 years old securities trading.
(4) Hong Kong Bond Market
1.Historical evolution
For a long period of time, the bond market in Hong Kong, China, has not been fully developed, with only sporadic bond issuances. and trading activities. In the 1970s, the Hong Kong government proposed the goal of developing Hong Kong into an international financial center. At this time, the practice of issuing bonds to raise funds increased. In July 2009, the Hong Kong government launched the government bond program. The main purpose of the program is to provide risk-free bond types and promote the development of the bond market in Hong Kong, China.
2. Current situation
Compared with the stock market, the bond market in Hong Kong started late and developed rapidly, but its overall scale is not large. In recent years, with the development of the RMB offshore market in Hong Kong, China, the Hong Kong RMB bond (commonly known as “dim sum bond”) market has The market has become a new growth point. In 2017, the “Bond Connect” program was launched between Hong Kong and the Mainland, allowing domestic and foreign institutions and individuals to access each other’s markets through the Hong Kong bond market.
(5) Financial market supervision in Hong Kong, China (separate supervision)
1. Regulatory agencies
banking
Hong Kong Monetary Authority (HKMA)
1. Origin: In 1993, the Exchange Fund Administration and the Office of the Supervisory Banking Regulatory Commission merged to form the Hong Kong Monetary Authority. 2. Responsibilities: Maintain the stability of the financial system and banking industry (equivalent to the central bank). 3. Other objectives: maintain the stability of the Hong Kong dollar, improve the efficiency of the financial system and promote its development, Maintain and develop Hong Kong’s financial infrastructure, manage the Exchange Fund, and maintain integrity and impartiality financial system, etc.
Securities, futures
Securities and Futures Commission (SFC)
1. Nature: Established in 1989, it is an independent statutory body. 2. Responsibilities: Responsible for supervising the securities and futures markets, promoting and promoting the development of the securities and futures markets exhibition. Maintain and promote the fairness, efficiency, competitiveness, transparency and market integrity of the securities and futures industry order, and provide protection and education to the public investing in financial products. Regulation and supervision Hong Kong Exchanges and Clearing Limited and its subsidiaries
Insurance
Insurance Regulatory Office (Insurance Regulatory Office)
1. Nature: The Insurance Regulatory Commission is an office within the government structure, responsible for the implementation and regulation of insurance. The main functions of the legislation on companies and intermediaries are to protect the interests of policyholders and promote insurance policies. The overall stability of the insurance industry. 2. In order to ensure that the regulatory framework of the insurance industry keeps pace with the times, the Hong Kong government in April 2014 A relevant bill will be submitted to the Legislative Council to establish an independent Insurance Regulatory Authority.
2. Self-regulatory organizations
banking
Hong Kong Association of Banks
Main functions: To promote the interests of licensed banks in Hong Kong; and in consultation with the Financial Secretary After receiving opinions, formulate bank operating rules, etc. [Tips] Although the banking license in Hong Kong, China is issued by the Hong Kong Monetary Authority, licensed banks Membership of the Guild is required to operate business in the Hong Kong Special Administrative Region of China.
Securities Industry
Hong Kong Exchange
Main functions: formulating listing rules; regulating companies intending to be listed on the Hong Kong market; to and continue to monitor listed companies.
Insurance
Hong Kong Federation of Insurance Companies
1. Nature: It is a self-regulatory agency for underwriters and was registered as a limited company in 1994. 2. Role: The insurance industry is one of the few industries in Hong Kong that enjoys a high degree of autonomy. It is closely related to the government prudential regulatory mechanisms complement each other. On the one hand, the Insurance Federation often communicates with insurance supervision professionals dialogue with members to negotiate legislative matters affecting the insurance industry; on the other hand, it promotes and improves the industry self-regulatory system, improve the professional level of the insurance industry, and strengthen citizens’ trust in the insurance industry Heart
2. British financial markets
Currently, the UK is the world’s largest exporter of financial services, with a net surplus of US$77 billion in financial services in 2016. That’s more than the combined U.S. ($41 billion) and Switzerland ($22 billion).
(1) London foreign exchange market
1. Status: The London foreign exchange market is the largest foreign exchange wholesale market in the world. Due to the dominant position of the British pound in the international monetary system, Before World War II, London was already the world's most important foreign exchange trading center.
2. Transaction form: There is no fixed trading place, and transactions are completed through modern electronic communication systems.
3. Features:
(1) Mainly foreign currency transactions
(2) Mainly non-resident transactions (reflecting the high internationalization of the London foreign exchange market)
(3) Mainly wholesale transactions by financial institutions (mainly large multinational banks)
(4) Mainly focus on foreign exchange derivatives transactions
(5) Trading hours bridge the Americas and the Asia-Pacific continent (the foreign exchange market is a 24-hour global market)
(2) London interbank capital market and LIBOR
1. Inter-bank lending rate Interbank lending to balance capital positions is a daily practice for commercial banks and other financial institutions. The borrowing rate is the interest rate applicable to unsecured short-term loans between banks and is an important reference indicator for financial institutions to determine the cost of funds. Financial institutions often add or subtract certain percentage points on this basis to generate interest rate pricing for different financial products.
2. The world’s major lending rates Shanghai Interbank Offered Rate (SHIBOR), Hong Kong Interbank Offered Rate (HIBOR), Eurozone Interbank Offered Rate (EURIBOR), and Tokyo Interbank Offered Rate (TIBOR) are all important benchmark indicators for the short-term capital market in the region. London is home to the world's major financial institutions, with high frequency and large amounts of capital exchanges between financial institutions. The birthplace of short-term capital movements. Along with this, the London Interbank Offered Rate (LIBOR) has become the most important short-term capital cost benchmark (Benchmark) in the global financial industry. It is still the most important reflection indicator of international interest rates and the most commonly used reference interest rate for pricing financial instruments.
(3) British stock market
1. Hierarchy of the London Stock Exchange
Mainboard market (Main Market)
Supervision is the strictest. Main board listings are divided into premium listings (Premium), standard listings (Standard) and high growth boards Block listing (High Growth Segment, HGS) three categories.
Alternative Investment Market (AIM)
The listing conditions are looser than those in the main board market, and are suitable for smaller growth companies to go public and finance. capital.
Professional Securities Market (PSM)
The professional securities market was established for professional investors or institutional investors and opened in July 2005. The listed products are divided into depositary receipts (DRs) and specialist debt securities (Specialist Debt Securities). Security) two categories. [Tips 1] Depository receipts: transferable certificates of a certain number of company shares, which can be independent of The underlying shares are listed and traded separately. Usually issued in U.S. dollar denominations by the custodian bank. [Tips 2] Expert debt securities: There are many types, common ones include European bonds, credit bonds Notes, asset-backed securities, high-yield bonds, convertible bonds, exchangeable bonds, etc.
Specialized Fund Market (SFS)
The professional fund market provides listing channels for various closed-end investment funds, and the listing rules are implemented in Europe. Alliance standards, regulated by the exchange
Elite
The elite project actually has no direct relationship with the capital market and is a start-up enterprise cultivation project. Should The program connects start-ups with business schools, potential investors, and various consultants to help These businesses grow and eventually become public companies.
2. London Stock Exchange trading system
There are multiple trading systems in the secondary market of the London Stock Exchange, and the trading mechanisms are also different.
SETS system (Stock Exchange Electronic Trading System)
1. Status: Launched on November 20, 1997, it is the current electronic order of the London Stock Exchange Book flagship system. 2. Applicable objects: FTSE 100 Index constituent stocks, FTSE 250 Index constituent stocks, FTSE Small Cap Index Several constituent stocks, exchange-traded funds, exchange-traded structured products and some highly liquid products Second board market stocks, Irish and London registered standard listed stocks are traded through this system. 3. Features: The SETS system supports both automatic matching of anonymous orders and market maker quotations, so it mixes the characteristics of both instruction-driven and quotation-driven trading methods. 4. Transaction requirements: (1) Securities traded on the SETS system must have at least one market maker, and the market maker needs to provide Bilateral quotes of at least 1 trade market size (usually £2,500) to maintain liquidity. (2) The SETS system implements collective bidding at the opening and closing of the market, and the exchange also provides bilateral under-trading transactions. Easy (Off Book). Since March 21, 2016, the SETS system has added Add an intraday centralized bidding.
SETSqx system (stock exchange electronic trading system - quotation and bidding)
1. Applicable objects: SETSqx system provides trading services for securities with relatively poor liquidity, mainly They are secondary market stocks and some stocks not included in the FTSE index series. 2. Transaction requirements: (1) Market makers provide at least one non-electronic bilateral quotation of the size of the trading market within the day to maintain maintain liquidity. (2) Four electronic collections are provided regularly at 9:00, 11:00, 14:00, and 16:35 during the trading day. Bid. (3) If the call auction cannot reach a transaction at the closing time, the market maker’s best bid price and the lowest price will be used. The average of the best selling quotes is used as the closing price.
SEAQ system (Stock Exchange Automated Quotation System)
1. Applicable objects: stocks listed on the second board market that are not traded on SETS and SETSqx. the system for it We provide a non-electronic executable market maker quotation system. 2. Trading requirements: Each stock requires at least two market makers, and newly listed securities cannot enter the SEAQ system. system trading
IOB system (International Order Book System)
1. Applicable objects: depositary receipts. 2. Trading requirements: Market makers must provide at least one trading market specification in more than 90% of trading sessions. Bilateral quotation of the module, but does not need to participate in the closing call auction stage quotation.
(4) London Bond Market
1. The United Kingdom is one of the important origins of modern bonds. The birth of British bonds is inseparable from the British war need for global dominance.
2. London Bond Market Classification
gilt market
1. Concept: British central government bonds are the main variety in the British bond market. 2.Issuer: The Bank of England, as the central bank, issues on behalf of the British Treasury and in the secondary market Trade Treasury Bonds. 3. Trading: British government bonds are all listed on the London Stock Exchange, but most transactions are in the over-the-counter market Done through market makers. In addition, there are more active futures, options and repurchase transactions on British government bonds.
international bond market
2. Issuer: central government of a sovereign country, super-sovereign institution (such as the World Bank, International Monetary Fund organizations) and foreign companies.
corporate bond market
The London corporate bond market is relatively small and can be issued publicly or privately, usually also in London. The stock exchange is listed for trading, but the over-the-counter market is more important
(5) London Gold Market
1. Status: The London gold market is the world's largest gold spot market.
2. Development history:
After 1850, the "Five Major Gold Merchants" developed, and gold merchants traded with each other and developed offline. In 1919, the five major gold merchants created the London gold fixing mechanism. In 1987, the Bank of England led the establishment of the London Bullion Market Association (LBMA). The association is organized through membership The organization stipulates gold smelting and casting standards, trading methods, etc., and organizes over-the-counter transactions among members. LBMA continues the pricing mechanism of the five major gold merchants, but only Rothschild International Bank remains among the earliest five banks. The remaining four were replaced by Deutsche Bank, UBS, Scotiabank and HSBC. In 2004, Rothschild Bank was replaced by Barclays Bank. OK. In 2014, due to the manipulation scandal, Deutsche Bank withdrew from the bargaining house, and then the LMBA abandoned the London gold fixing price mechanism. The London gold benchmark price will also be maintained by the Intercontinental Exchange and supervised by the British Financial Conduct Authority (FCA). Tube. In 2015, after Intercontinental Exchange took over the LBMA London gold and London silver fixing prices, it carried out reforms and included price negotiations. increased to 13 (including Bank of China, Industrial and Commercial Bank of China, Bank of Communications, and China Construction Bank), every morning There will be gold auctions at 10:30 and 3:00 p.m., and silver auctions at 12:00 p.m. London on the day of the auction Gold and London silver benchmark prices (USD prices).
(6) Other financial markets in London
1. The London Metal Exchange was founded in 1877 and was acquired by the Hong Kong Exchange in 2012. The London Metal Exchange provides copper, Spot, futures and options trading of aluminum, zinc, lead, tin, nickel, steel, cobalt, molybdenum, gold, silver and other industrial metals are currently the world's largest industrial metal trading market. 2. The London insurance market is currently the fourth largest in the world and the largest in Europe. Among them, Lloyd’s insurance market has a history of more than 300 years and is currently the most important insurance market in the world. 3. London is also an area where international financial derivatives transactions are relatively concentrated. There are a large number of financial derivatives contracts being traded on the Intercontinental Exchange, the London Stock Exchange and the over-the-counter market.
(7) Financial market supervision in the UK
1. The period of separate supervision based on self-discipline
The Bank of England Act 1946 stipulates that, with the approval of the Treasury, the Bank of England can direct banks’ operating practices. guidance, but not put into practice. 17 It was only in 1973 that the liquidity crisis of securities companies and a large number of small and medium-sized banks appeared for the first time in the UK. The importance of financial regulation. The Banking Act of 1979 was enacted, formally giving the Bank of England financial regulatory powers. In the same year, the Depositor Protection Act was enacted After the announcement, financial supervision gradually got on the right track and a separate supervision pattern based on self-regulation was established. 2.FSA unified supervision period In 1986, in order to cooperate with the privatization reform of state-owned enterprises, the Thatcher government launched the financial "big bang" reform. Commercial banks have acquired securities brokers one after another, and a number of financial groups have emerged. Separate supervision is increasingly unsuitable for comprehensive operations. development needs. The revised Bank of England Act in 1998 gave the Bank of England monetary policy independence and imposed restrictions on deposits. The agency's supervisory responsibilities are transferred to the Securities and Investments Authority, but financial stability responsibilities are retained. In 2000, the Financial Services Act was implemented, and in 2001, the unified regulatory agency, the Financial Services Authority (FSA), was formally established. Responsible for the prudential supervision of banking, securities, and insurance financial institutions, and a unified supervision system was established. To strengthen supervision For management cooperation, the Ministry of Finance, the Bank of England and the FSA signed a memorandum of understanding to establish a tripartite committee. President. The Ministry of Finance is responsible for the establishment of the financial regulatory system and related legislation, as well as negotiations and coordination with the European Union. 3. Supervision model with parallel macro-prudential and micro-behavior supervision The global financial crisis in 2008 severely damaged the British financial industry, especially the liquidity crisis of Northern Rock Bank, which triggered The first bank run in the UK since 1866 has once again triggered social reflection on the regulatory system. After the crisis, the UK comprehensively adjusted its regulatory agency settings with the core of building a strong central bank: at the Bank of England The Financial Policy Committee (FPC) is established under the Bank of England and is responsible for macro-prudential management; the FSA is revoked and a prudential supervisory authority is established under the Bank of England. The Financial Conduct Authority (PRA), which is jointly responsible for micro-prudential supervision with the separately established Financial Conduct Authority (FCA); clarifies that the Bank of England Act as a bank resolution agency and grant broad resolution powers; establish a multi-level regulatory coordination mechanism to clarify the Bank of England’s The division of responsibilities between the Bank of China and the Ministry of Finance in crisis response. On April 1, 2013, the new Financial Services Law came into effect, and the new financial regulatory framework officially came into operation.
1. Global financial markets and financial systems
(1) The formation and development trends of global financial markets
1. The formation of ancient currency and finance
Shell decoration appeared around 5000 B.C. By around 2000 BC, a distinct financial district had emerged in the ancient Babylonian city of Ur. The ancient Greeks, the origins of today's Western civilization, established banks, monetary systems, and commercial courts. The ancient Romans were here On this basis, new corporate enterprises, limited liability investments and even the prototype of a central bank were created.
2. The predecessor of the physical financial market (first formed in continental Europe in the 17th century)
Securities trading in Italian commercial cities in the 15th century was mainly the purchase and sale of commercial paper. Lyon and Antwerp in the 16th century are considered to be the earliest areas where securities trading activities occurred. At that time, trading was national debt. In the mid-16th century, with the development of the capitalist economy, the production and management method in which ownership and management rights were separated—— The emergence of joint-stock companies brought stocks, corporate bonds and real estate mortgage bonds into the ranks of securities transactions. In 1602, the Dutch East India Company established the world's earliest stock exchange, the Amsterdam Stock Exchange. Dan Stock Exchange.
3. The real development of global financial markets
(1) The first stage: from the rise of Britain in the 17th century to the First World War
①At this stage, the UK is the country with the fastest development and greatest influence in the global financial market.
In 1649, the United Kingdom established the world's first joint-stock commercial bank, the Bank of England, marking the beginning of the modern era of the United Kingdom. The establishment of the agency banking system. The London Exchange, founded in 1773, replaced the Amsterdam Exchange as the largest exchange in the world at the time. In 1816, Britain was the first to implement the gold standard, with the pound becoming the most widely used currency. In the 19th century, the United Kingdom formed an international financial market, and London became an international financial center.
②The U.S. financial market began with the purchase and sale of government bonds
In 1790 the first stock exchange in the United States, the Philadelphia Stock Exchange, was established. In 1817, the brokers involved in securities trading at Tondy's Cafe on Wall Street adopted a formal charter and established an organization. Named "New York Stock Exchange" (renamed "New York Stock Exchange" in 1863). After the Revolutionary War, the American Industrial Revolution began. Affected by the industrial revolution, company stocks in the securities market gradually Instead of government bonds, transportation company stocks, railway stocks, and mining stocks have appeared on the securities market. At the same time, bank stocks, insurance company stocks and some non-financial institution company stocks also began to appear, and stock trading began to prevail.
(2) The second stage: from the beginning of World War I to the end of World War II (transition period)
①The British hegemony was gradually replaced by the United States
Britain's dominance in industrial production and international trade was gradually replaced by the United States. The status and interests of various countries in the global economy The profit pattern has undergone great changes. London's international financial business is diverted to the markets in New York, USA, and Zurich, Switzerland. first The world war greatly increased the flow of international capital, and international fund lending and fund-raising activities occurred on a large scale during the war. Move to the New York market, making it the largest international capital flow market
②Changes after the Great Depression
After the Great Depression occurred from 1929 to 1933, the entire Western world fell into a comprehensive Great Depression, and international trade volume dropped sharply. Beginning in 1934, under the leadership of the U.S. Reciprocal Trade Agreements Act, countries began to lower trade barriers. The outbreak of World War II in 1939 undermined efforts to restore normal international financial order. In 1944 (the eve of the end of World War II), the Bretton Woods Conference announced the establishment of the International Bank for Reconstruction and Development (IBRD). The two major institutions (the predecessor of the World Bank) and the International Monetary Fund established an international monetary system centered on the US dollar. The U.S. dollar became the major international reserve currency and settlement currency, and New York became the world's financial center.
(3) The third stage: from the end of World War II to the collapse of the Bretton Woods system in 1971
The rise of Europe and Japan and the beginning of global economic and financial integration
At this stage, due to strict financial controls and the need for Europe's post-war economic recovery, the European currency market emerged. Tokyo has also begun to play an increasingly important role in the global financial market by virtue of its regional advantages. New York, London and Tokyo has become the "golden triangle" of the international financial market. In 1947, the General Agreement on Tariffs and Trade was signed, which provided a framework for a series of negotiations and subsequently Obstacles to international trade have been significantly reduced over more than half a century. Important new institutions, especially in Europe, have promoted the process of global economic and financial integration. The Treaty of Rome signed in 1957 established the European Economic Community, which grew from the original six member states to include The 28-member European Union, including a common currency (euro) covering more than half of Europe and the EU's central bank.
(4) The fourth stage: from the collapse of the Bretton Woods system to the eve of the global financial crisis in 2007 11 Developing countries begin financial reforms
At this stage, in order to get rid of poverty, developing countries have carried out financial reforms and supported financial liberalization through financial liberalization policies. the country’s financial markets. Emerging financial markets have an increasing impact on international financial markets. global loose gold Financial supervision, technological innovation, financial innovation and asset securitization have created favorable external conditions for the rapid development of financial markets in various countries. condition
(5) The fifth stage: since the outbreak of the global financial crisis in 2007 Strengthening financial supervision globally
From 2007 to 2009, a subprime mortgage crisis that began in the United States gradually evolved into a global financial crisis, and the world economy experienced a major The toughest test since the recession. After the crisis, governments around the world are reflecting on the underlying causes of the crisis. Tighter financial regulation
(2) Global financial system
1. Major participants in the global financial system (classified according to the "Guidelines for the Compilation of Financial Soundness Indicators")
Finance company
deposit taking institution
It refers to transferring funds from the lender to the borrower through an intermediary through one's own account. entities, including commercial banks and other deposit-taking institutions. (1) Commercial banks usually accept deposits and play a core role in the payment system. (2) Other deposit-taking institutions include savings banks, development banks, credit unions, Investment banks, mortgage banks and building societies, deposit-taking small loans mechanism.
central bank
It is a national financial institution and the key to controlling the financial system. Its business mainly includes the issuance of currency. currency, manage foreign exchange reserves and provide credit to deposit-taking institutions
Other financial companies
Mainly those auxiliary financial institutions engaged in financial intermediaries or closely related to financial intermediaries. A company that does business but is not listed as a deposit-taking institution. [Examples] Insurance companies, pension funds, securities dealers, investment funds, financial companies, Leasing companies and financial auxiliary economic institutions, etc.
non-financial company
As customers of financial companies, non-financial companies have an important role in the health and stability of financial companies. meaning. Non-financial companies refer to a type of institutional entity whose main business is to Provide products or non-financial services at reasonable prices
residents
As customers of financial companies, non-financial companies have an important role in the health and stability of financial companies. meaning. Non-financial companies refer to a type of institutional entity whose main business is to Provide products or non-financial services at reasonable prices
Non-profit organization serving residents
general government
It refers to a unit that exercises legislative, judicial and administrative power over other institutional units within a specific area. Bit. The government has the power to tax, borrow, distribute goods or services to all or part of society, and Redistribute income. The government can influence and be affected by the activities of financial firms
Public Sector
The public sector includes general government, central banks and deposit-taking sectors as public corporations and other ministries The entity in the door. Public corporations are defined as non-financial or financial corporations that are controlled by a government agency.
2.International capital flow methods
(1) Concept: refers to the movement of capital across national borders from one country to another.
(2) Classification: International capital flows include two aspects: capital inflow and capital outflow. According to the different use time or transaction period of funds, they can be divided into international long-term capital flows and international short-term capital flows.
Long-term capital flows (more than 1 year or no specified use period)
international direct investment
1. Concept: refers to those international assets with the purpose of obtaining actual control of foreign enterprises. This flow. 2. Form (3 types): One is to establish a business abroad through sole proprietorship, joint venture, cooperative enterprise, etc. new ventures; The second is to acquire the equity of foreign enterprises to the proportion of actual control; The third is profit reinvestment.
international indirect investment
1. Concept: International securities investment refers to the issuance and trading of securities in the international securities market. International capital flows formed by long-term marketable securities. 2. Investment securities: preferred stocks, common stocks, government bonds, enterprises Bonds and bonds issued by some international organizations, etc.
international credit
1. Concept: refers to the government of one country (several countries), international financial organizations or international banks on Africa Conducted by residents (including foreign governments, banks, enterprises, etc.) for a period of more than one year lending activities. 2. Form: government loans, international financial institution loans, international bank loans and export letters Loan etc.
Short-term capital flows (1 year or less)
Trade capital flows (most traditional)
1. Concept: The international financing and settlement of monetary funds caused by international trade. 2. Status: Early international capital flows mostly appeared in this way. With the opening of the economy With the increase in the degree of trade and the diversification of international economic activities, trade capital flows now The proportion of capital flows has been greatly reduced.
Flows of arbitrage funds
1. Concept: It is an arbitrage activity that takes advantage of the differences in interest rates and exchange rates in the financial markets of various countries. Short-term capital flows caused by fluctuations. 2. Status: With the deepening of financial internationalization and the continuous innovation of financial instruments, the flow of such short-term funds has a trend of increasing.
value-preserving capital flows
1. Concept: Also known as hedging capital flow or capital flight, it refers to financial assets The short-term capital flow caused by the holder's capital allocation for the sake of capital security. 2. Causes: turbulent political situation, deteriorating economic situation, imbalance of international payments, and Currency devaluation. When a country announces the implementation of foreign exchange controls, restrictions on capital outflows, or increases Increasing the tax burden on capital outflows may also cause a large amount of capital flight.
speculative capital flows
1. Concept: refers to investors taking advantage of the fluctuations in financial assets or commodity prices in the international market. Movement, the capital flow formed by selling high and buying low. 2. Status: At present, the scale of international speculative funds is increasing, and the flow of speculative funds movements constitute the main body of short-term capital flows