Bank intermediary operations with securities. Intermediary operations. Intermediation services in transactions with securities

Intermediation services in transactions with securities

Intermediary services for currency transactions

The bank advises its clients on the following issues:

• 
  economic (financial) analysis and accounting;
• 
  analysis of the solvency of the client’s business partners;
• 
  organization of issue and secondary circulation of securities;
• 
  choice of investment directions, etc.

Trust services is a type of activity of commercial banks in managing property, which, by agreement with the client, is transferred to the bank. Property management is associated with the implementation of accounting operations, safety of valuables, placement of funds, financial analysis. Bank guarantors are, as a rule, individuals and legal entities, charities and other foundations. Services provided to individuals:

• 
  disposal of inheritance(operations to obtain court decisions, collection and preservation of inheritance, payment of administrative expenses, settlements with creditors, payment of taxes, division of property);
• 
  management of personal trusts(operations for managing property that was transferred to the bank for management);
• 
  guardianship and preservation of property;

Agency services for individuals include:

• 
  property insurance;
• 
  investment and commercial transactions on behalf of the owner;
• 
  paying bills;
• 
  payment of taxes.

• 
  disposal of assets;

• 
  information and analytical on the stock market of Ukraine, Russia and far abroad;
• 
  development of the optimal structure of the securities portfolio,
• 
  consulting services for securities portfolio management (10.1.100.50/Banking products/Investment operations/Asset management).

• 
  agency operations;
• 
  liquidation of enterprises.

Income from trust services is generated through commissions stipulated in the contract. Shelf life - from 1 day to 1 year, with the possibility of extending this period. Valuables are stored not in safe deposit boxes, but in a special storage facility (certified), equipped with the most modern security alarm systems.
^

Investment activities of commercial banks

Banks may have the right to make direct investments (for the exchange of financial assets and in the name of an authorized person) without the written permission of the National Bank, which is required in accordance with the rules established by relevant legal acts ami of the National Bank.

Banks may have the right to make an investment without written permission from the National Bank, if:

• 
  An investment in any legal entity is no more than 5 hundred rubles of the bank’s regulatory capital;
• 
  a legal entity in which the investment is made, including the provision of financial services;
• 
  The regulatory capital of the bank fully corresponds to the benefits established by this Instruction, and the opportunities for investment established by the regulatory legal acts of the National Bank.

Investment activities in banking practice it is associated with investing in securities of enterprises (different forms of ownership) for a relatively long period of time.

Main goals of banking investments:

• 
  receiving income ( receiving the maximum possible dividends on shares and interest on debt obligations);
• 
  ensuring the safety of bank funds and their growth based on the increase in the market value of securities (relative level of risk and stability in income generation);
• 
  regulation and provision of bank liquidity (quick and break-even conversion of securities into cash);

1.By composition:

• 
  straight;
• 
  portfolio;

Under capital investment a trace of the government's operation, which transfers the addition of booths, spores, other objects of indestructible power, other fixed assets and intangible assets that support depreciation throughout by the Law.

Under financial investment After understanding the government operation, which involves the acquisition of corporate rights, securities, derivatives and other financial instruments. Financial investments are divided into direct and portfolio

Under reinvestment It is necessary to understand the government operation that transfers capital and financial investments for the amount of income (profit) withdrawn from investment operations.

Direct investment - a government operation that transfers contributions of funds or money to the statutory fund of a legal entity in exchange for corporate rights issued by such a legal entity.

Portfolio investment - a government operation that transfers the addition of valuable securities, derivatives and other financial assets for money on the stock market (except for the operation of buying shares as a direct payer of the tax, as well as related to with him by persons, in obligations that exceed 50 hundred rubles of legal sum shares held by another legal entity that is subject to direct investment)(Law of Ukraine “On the subsidy of income from enterprises” No. 283/97-BP dated May 22, 1997 with amendments, Art. 1).

^ 2. By timing:

• 
  short-term;
• 
  mid-term;
• 
  long-term;

• 
  investments in shares;
• 
  investments in bonds;
• 
  investments in other debt obligations.

Banks carry out direct investments and transactions with securities in accordance with the legislation of Ukraine on securities, investment activities and in accordance with the regulations of the NBU.

The bank is prohibited from investing money in the enterprise, the establishment, the statute of which transfers the full responsibility of its rulers. Directly the fate of the bank from the capital of any enterprise is mediated, it is not necessary to transfer 15 hundred rubles of capital to the bank. The bank's total investment does not have to exceed 60 hundred rubles to the bank's capital size. This exchange does not stagnate if:

1. 
   shares and other valuable papers added by the bank to the exercise of the rights of the bailholder and the bank does not hold them for more than one term;
2. 
   a bank by creating a financial holding group by acquiring shares, the issuer of which is another bank;
3. 
   Valuable papers are in the hands of the bank for no more than one fate, which is taken away from the underwriting results;
4. 
   shares and other valuable papers added by the bank for the account and on behalf of its clients(Law of Ukraine “On banks and banking activities” dated June 20, 2001 No. 2740-III, art. 50).

• 
  credit riskcharacteristic of securities in the case when the financial capabilities of the issuer sharply deteriorate, which leads to the impossibility of repaying the debt on the securities;
• 
  market riskoccurs in the event of unexpected changes in prices on the securities market;
• 
  interest rate riskis associated with fluctuations in interest rates, which can lead to losses in investment activities.

• 
  diversification involves placing funds in securities of different clients and different types;
• 
  step method involves placing funds in securities of different maturities;
• 
  “barbell” method involves placing funds in securities with polar maturities;
• 
  reserve formation method involves the creation of reserves for compensation of losses from transactions with securities:

Special reserve formed in case of a fall in the market price of a group of securities. All groups of securities that have been in the bank’s portfolio for sale for more than 15 business days or in the investment portfolio for more than 30 business days are subject to reservation. The market price of securities is determined and a special reserve is formed as the difference between the book value and market price of a group of securities if the market price is less than the book price. The formation of a reserve is considered a bank expense and is used to cover losses upon the sale of securities or forced transfer.

The following are not subject to reservation:

• 
  securities of own issue (share and debt);
• 
  securities, the sale of which is agreed upon in the contract and prepayment has been received;
• 
  bills of exchange accounted for by the bank, which act as the object of reservation as an integral part loan portfolio;
• 
  funds invested in the authorized capital of subsidiaries and associated companies (except for cases of transfer from the investment portfolio to the sales portfolio);
• 
  investments in securities of institutions, and the bank’s goal is the ability to exercise other rights, and not to obtain economic income (10.1.100.50/Supporting directions/Financial department/regulatory documents/“About the procedure for distributing the reserve for the recovery of cash flows from transactions with valuable papers” No. 446 dated 11/13/2000).

In accordance with the Law of Ukraine “On Securities and stock exchange” the bank’s total balance sheet securities portfolio may include securities issued by residents and non-residents of Ukraine and admitted to circulation on the stock market of Ukraine:

• 
  shares of subsidiaries and associated companies;
• 
  securities of partial participation business companies (except for joint stock companies);
• 
  common and preferred shares of closed and closed joint-stock companies open type;
• 
  bonds of enterprises, subsidiaries and associated companies;
• 
  savings certificates;
• 
  domestic government loan bonds;
• 
  securities that are refinanced by the NBU;
• 
  bills of exchange of business entities;
• 
  own common and preferred shares.

1. Securities derivatives (futures, forwards, options and others) are not included in the balance sheet securities portfolio.

2. The balance sheet securities portfolio is divided into a sales portfolio and an investment portfolio (10.1.100.50/Supporting directions/Financial department/Regulatory documents/“About the procedure for distributing reserves for cash flow during transactions with securities” dated November 13, 2000, No. 446, clause 3.1., clause 3.2.).

3.When implementing portfolio investments accounting of securities is carried out in groups (securities of one issue of one issuer in one banking portfolio).

4. In case of changes in internal and external business conditions, the bank can transfer securities from one portfolio to another (10.1.100.50/Supporting directions/Financial department/Regulatory documents/“On the procedure for the allocation of reserves for the recovery of cash flows from transactions with securities” dated November 13, 2000, No. 446, clause 3.3.).

5. Groups of securities in the banking portfolio are accounted for at market prices

^ TYPES OF SECURITIES TRANSFER:

• 
  free translation – this is the transfer of a group of securities from one portfolio to another based on a voluntary decision of the management of a commercial bank (from the sales portfolio to the investment portfolio);
• 
  forced transfer is the transfer of a group of securities from one portfolio to another according to the requirements of banking regulations (from the sales portfolio to the investment portfolio and from the investment portfolio to the sales portfolio)(10.1.100.50/Supporting directions/Financial department/Regulatory documents/“About the procedure for distributing reserves for the recovery of cash flows from transactions with securities” dated November 13, 2000, No. 446, p. 2.).

Intermediary transactions with securities include:

^ ISSUE AND INTERMEDIATION OPERATIONS:

1.development of feasibility studies for investment projects, development of investment programs and preparation of project documentation in accordance with international standards;

2.formation of optimal emission portfolios, selection of tools for attracting financial resources, drawing up emission schedules, assessing the possibilities of raising funds in different regions, justifying the rational level of profitability on issued securities;

3.underwriting- purchase of valuable papers on the primary market with their subsequent resale to investors; stipulation of the agreement on the guarantee of a permanent or partial sale of the issuer’s valuable papers to investors, on the repeated and partial purchase of them at a fixed price with an immediate resale or on the invoice on the purchase of both "languages ​​to work as best as possible in order to sell as soon as possible for more valuable papers, don’t take the crops and get them be some valuable papers that were not sold (Law of Ukraine “On Banks and Banking Activities” dated June 20, 2001 No. 2740-III, Art. 2).

^ TRUST OPERATIONS:

Trust transactions with securities – This is the activity of commercial banks in the role of a trustee of their clients in managing securities on their own behalf with the obligation to preserve and increase the client’s capital for a certain fee (usually a percentage of the increase in the client’s assets).

^ INFRASTRUCTURE OPERATIONS:

Depository activities – implies the provision of services for the preservation (deposit) of securities and the execution of orders with the exercise of rights certified by securities(“Regulations on depository activity” No. 61 dated May 26, 1998.) Specialized divisions are created at banks to carry out such activities - securities depositories, which perform the following functions:

depository accounting of securities in two main forms:

• 
  by replacing securities with a single global certificate, which are stored with the depositary and a separate DEPO account is opened for each owner of the certificate;
• 
  issuance of securities in the form of electronic records using a computer system;

• 
  separate (closed);
• 
  collective (open).

Classification of subjects of foreign exchange transactions

Acting as intermediaries in transactions with securities, commercial banks provide a range of services:

1. raising funds for production development, incl. underwriting - subscription, initial placement of shares of issuing companies, and before that analysis, evaluation and establishment of the preliminary price of the issued security. If a bank client needs to obtain financial resources for a long period of time (for the reconstruction of an enterprise, or for developing a new type of business, or for the construction of a new enterprise), he can turn to the bank for help, since banks are engaged in professional activities in the financial market. In this case, the bank is a financial consultant (most corporations maintain contact with only one bank and prefer to negotiate the terms of sale of their new issues of securities only with it), helping the client to attract financial resources, i.e. decide what is more appropriate: the use of credit resources, the creation of venture enterprises or the placement of securities.

If a company decides to make a public offering of securities for sale, the bank assists the company in setting the price and assessing the timing of the offering of securities for sale. The bank may make an initial placement of securities on the basis of maximum conditions or on the basis of a guaranteed placement for the issue of securities. With a guaranteed subscription to an issue, the company actually receives a guarantee of placement of securities, since the bank agrees to buy the entire issue and then sell it in parts to its clients (this transaction is formalized by an underwriting agreement, which can combine agency agreements, guarantees, an agreement for consulting services, loan agreement etc.). This allows the issuer to plan the allocation of capital to be raised without fear that the entire issue of securities will be unsold. Some banks often act as large underwriters of securities, while others limit themselves to relatively small amounts.

2. transactions on mergers, acquisitions and restructuring of enterprises. Banks can be involved in these transactions through:

o participation in the organization of the merger;

o assisting target companies in developing and implementing defense tactics;

o conducting a target assessment of the acquired company,

o participation in the financing of the merger.

Target firms that do not want to be acquired usually enlist the help of banks and law firms that specialize in blocking mergers. Many mergers are financed by the acquiring company's free cash flow. Since this is not always possible, there is a need for sources of funds to pay for the target company. The bank prepares financial forecasts and estimates for the company in order to determine the amount of debt that the company is able to service; Together with the company, they develop a financing plan (the missing investments are made by the bank), i.e. in this case, the bank operates in two directions: traditional banking ( credit operation) and analytical work related to investments.

3. formation and management of investment portfolios of clients;

4. working with investor clients to provide information about the current market situation in order to make an informed investment decision;

5. brokerage and dealer operations. Brokerage is the activity of making transactions with securities as an attorney or commission agent. A broker, on behalf of his clients, buys and sells securities for them. The need for such mediation is due to the fact that the high professionalism of the broker should help achieve the best result for the investor and protect the latter from a number of risks inherent in the market. The broker performs its functions for a fee (commission).

As a rule, the broker provides the following set of services to the client:

· providing information about the issuer, the market situation, consulting;

· concluding transactions based on client instructions;

· execution of transactions (receipt of security certificates for the client, re-registration of rights in the register and depository in the name of the client or buyer, nominee holder).

The dealer carries out transactions with securities on the exchange on his own behalf and at his own expense by publicly announcing the purchase and/or sale prices of certain securities. The dealer works on the basis of an offer, i.e. an offer addressed to a potentially unlimited number of persons to conclude a transaction on the terms of the offer. Any person, expressing his consent to the offer, thereby concludes a transaction, and the dealer is obliged to fulfill it. Refusal to execute a transaction by a dealer on the terms announced by him is not allowed. The proposal (offer) must stipulate the essential terms of the transaction at the discretion of the dealer. As a rule, it includes the purchase and/or sale price, the minimum (maximum) volume of one transaction, the validity period of the offer, the procedure for transferring securities and payment. The dealer receives income from the spread, i.e. due to the difference in purchase and sale prices. As a rule, in a competitive environment, spreads are set at a fairly small level (a fraction of a percent), so the opportunity to generate income lies in increasing turnover. Dealer activity helps to increase market liquidity.

6. depository operations. Depository - an organization that stores the securities of its clients and services these securities (collection and distribution of interest, dividends, etc.). The bank's depository activities play a major role in servicing the securities market. . It consists of providing services for storage, guardianship, trusteeship of client securities certificates and/or accounting for the transfer of rights to them. The content of depository activities is to ensure ease of use and transfer of securities, reduce transaction risks, and simplify the processing of information about securities, the rights they provide and their owners. The relationship between clients and depositories is based on the transfer (issuance) of orders to them to carry out certain transactions with securities, including on the basis of documents confirming the implementation of purchase and sale transactions. Depositories receive a fee for their services.

39. An important source/element of bank capital is authorized capital/authorized fund . The authorized capital is formed and replenished, first of all, at the expense of funds, both in national and foreign currency.

Authorized capital– the value of issued ordinary and preferred shares. Partially, the bank's authorized capital can also be formed from the non-monetary part - from tangible assets (buildings, premises, computers, equipment, excluding unfinished construction - that which is directly related to the bank's activities). The share of tangible assets at the request of the Central Bank of Russia is no more than 20% of the share placement price.

In accordance with the regulation of the Central Bank of Russia No. 135, attracted sources of founders cannot be used to pay for the authorized capital of a newly created bank.

Replenishment of the management company

1) To comply with the requirements of the Central Bank of Russia (to obtain additional licenses)

2) To strengthen the financial stability of the bank

3) To expand activities

The main ways to replenish the capital account:

1) Add. issue of shares, raising funds from shareholders to pay for shares

2) Add. (repeated) issue of shares, when not shareholders’ funds are used to pay for them, but funds allocated from the bank’s property (capitalization of the management company); When capitalizing, the following sources can be used to pay for the management company:

a. Part of the reserve fund

b. Part of other funds

c. Part of retained earnings remaining at the end of the year

d. Funds from property revaluation

e. Share of share premium

The first method involves attracting external sources, the second - internal, and there is a redistribution of sources of capital.

A variation of the first method of increasing capital assets is IPO operations.

IPO is an initial public offering of shares on international markets.

IPO Features:

1) Mobilization of significant resources, because placed at market value

2) Shares are publicly placed among a wide unlimited range of persons

3) A costly operation, mainly for large banks (reporting, presentations).

Active Operations– operations related to the allocation of resources in order to obtain profit or other benefits. The results of active operations are reflected in the assets of the bank’s balance sheet as specific assets: loans, investments in securities, cash on hand, correspondent account balances, etc.

· Warranty

· Trusted

· Estimated

· Stock

Many of these transactions are accounted for separately from the underlying transactions on a separate balance sheet.

On volume, structure of active operations a particular bank is influenced by a variety of objective and subjective factors:

· The state of the economy is an external, most clearly influencing factor.

· Level of development of the financial market - external

o Foreign exchange

o Securities market

· Inflation rate - external

· The bank is provided with capital and its own sources

· Specifics of the resource base

· Bank specialization

Active operations can be classified according to various criteria:

· By economic content

o Accounting and lending operations (individuals, legal entities, short-term, long-term, + bill accounting - buys a bill with a discount until maturity. All credit operations) 60-70% is borrowed from each bank.

o Investment operations (not only long-term investments, but any investment for the purpose of generating income):

§ Investments in securities for various purposes

§ Participation in the capital of other structures

§ Investments in the bank’s own fixed assets

o Cash transactions (cash movement - receipt, storage, issue). They play a big role in regulating bank liquidity. They occupy a small share.

o Deposit operations (can be both passive and active). This is when a bank places funds in other banks, including the Central Bank - on correspondent accounts, deposit accounts)

§ Investments in foreign currency

§ Factoring

· By profitability:

o Income-generating active operations (“working assets”): the bank places its funds and after some time they are returned to the bank with increased value (%, dividends, exchange rate differences, profit from investing in another structure, etc.)

§ Credit operations

§ Investment operations (investment in securities, leasing, equity participation)

§ Factoring (accounting for bills of exchange, placing funds in correspondent accounts, deposits in other banks)

o Non-income generating, non-performing assets.

§ Cash assets (which do not increase their value like loans, deposits, etc.

§ Investments in fixed assets

§ Placement of funds in the Central Bank

· Depending on the degree of risk (probability of losses)

o Risk Free Assets

§ Cash assets

§ Funds placed in the Central Bank

§ Investments in government debt

§ Some types of the most reliable loans (secured by precious metals, guaranteed by the government, secured by government securities, etc.)

o Active operations with minimal risk (investments in debt obligations of federal subjects, funds in correspondent accounts, loans guaranteed by financially stable banks, etc.)

o High-risk assets (the main part of loans, with the exception of those that have already been named, investments, equity participation, factoring, etc.

· By liquidity level. In this case, assets are considered as a potential means of payment, or as a reserve. In this regard:

o Primary reserves (immediate means of payment) - cash, funds in correspondent accounts with the Central Bank and other banks, etc.

o Secondary reserves -various securities, loans as an exception (mortgage refinancing mainly)

o Loans – all types of loans

o Other reserves – illiquid long-term investments – investments, equity participation, leasing, investments in own fixed assets.

At the beginning of 2014, according to the report on the state of the banking sector in 2013 (as of January 1, 2014), in the structure of active operations of banks:

· Traditionally, as always, credit transactions prevail. They account for 65% of assets. This is traditional in any period (crisis, post-crisis, normal state), and in the total volume of loans issued, 40% are loans to non-financial organizations.

· In terms of share, loans to individuals are in second place – 17.3%

· Loans to banks – approximately 8% of all loans.

· As for investments in securities – their share is 13.6%

· As for other types of assets, they still occupy a small share. So, for example, accounts with the Central Bank - 4% -3.9%; correspondent accounts in other banks – 2.6%

Credit

means funds that are provided to the borrower on the terms of payment, security, target orientation, urgency and return.

The principle of payment means that any funds are provided to the borrower with the condition of payment for their use of a certain percentage. Depending on the terms of the agreement, the interest rate under the loan agreement can be floating or fixed. Fixed - the loan does not change throughout the entire term, floating - provides for the conditions for revising the amount interest rate according to the formula specified in the loan agreement.

Security – this principle provides for the obligatory provision by the borrower of security, which will guarantee the return of funds. This security can be all movable or immovable property, the criteria of which meet the requirements of the creditor or a guarantee of a legal or natural person.

If the client fails to fulfill his obligations under the loan agreement, the lender has the right to sell the collateral and cover his losses with the proceeds. Movable property includes vehicles, deposits, securities, goods in circulation, etc. Real estate can be residential or commercial, the first includes apartments, houses, the second includes offices, enterprise buildings, factory workshops, premises where production activities of legal entities are carried out.

Targeted - this principle provides for the use of loan funds for specific purposes.

Depending on the target focus, loans are:

• mortgage – purchase of real estate;
• car loans – car purchases;
• current needs - purchase of household appliances, repairs, treatment, study, etc.;
• for replenishment of working capital - provided to legal entities for carrying out their activities, for example, payments wages, payments for fuel, other materials necessary for carrying out activities, etc.;
• investment – ​​provided to legal entities for the purchase of fixed assets, for example, commercial real estate, cars, equipment;

Urgency – all loan money is issued for a certain period. Depending on the period of use of borrowed funds, there are:

• short-term – up to 6 months;
• medium-term – up to 12 months;
• long-term – more than 1 year.

Return – loan funds must be returned to the lender in full. Before concluding a loan agreement, the lender and the borrower agree on a repayment schedule for the loan debt. As a rule, the standard repayment schedule provides monthly repayment principal debt on the loan, but also depending on credit programs, repayment can be made at the end of the contract term in one amount or quarterly. Repayment terms are agreed upon in advance by the parties and are specified in the loan agreement.

The following types of loans are also distinguished:

1) Depending on the currency:

• in foreign currency;
• in national currency;

2) depending on the borrower:

• for legal entities - lending to enterprises, firms or organizations;
• for individuals – lending to the population;

3) depending on the security:

• without collateral (blank);
• wealthy;

4) depending on the subject of the credit transaction:

• commercial – provides for the establishment by a legal entity that sells products or provides services of a deferred payment for its goods or services. The purpose of this type of lending is to accelerate commodity turnover. The client takes the product for sale and after the sale pays its cost to the manufacturer. The manufacturer does not stop its production and does not wait for the goods to be sold from the warehouse and revenue to arrive, but continues to work. A special feature of a commercial loan is that it is provided in commodity form. The subjects of the transaction can only be legal entities;
• banking - provided by specialized financial institutions in cash to both legal entities and individuals;
• state – one of the parties to the loan agreement is the state represented by executive authorities;
• international – one of the participants in the credit transaction is an international financial institution eg International Monetary Fund, Paris Club, etc.

44. Measures to overcome risks m Can be divided into three groups: 1. risk avoidance. This method is the simplest, however, it means refusing some operations - for example, issuing loans in certain situations. The limitations of this method are obvious

2. risk reduction (regulation) is expressed in a number of methods: - checking the client’s solvency and current control; - use of forms of security (pledge, guarantees, sureties, etc.); - insurance (hedging) of risk – aimed at limiting the impact of unforeseen, unpredictable changes as much as possible, ensuring a minimum deviation of actual profit from the expected one; - risk sharing, diversification, risk dispersion; - limiting risk through the need to comply with the regulations of the Central Bank of the Russian Federation

3. provision for risk in the bank’s balance sheet (through sources of covering losses - reserves for possible losses on loans, for depreciation of securities, reserve fund, required reserve fund).

The types of securities are determined by law. Intermediary transactions with securities in the interests of the client in order to generate income are related to professional and exchange activities in securities<1>. Let us consider the main types of securities and intermediary transactions with them performed by professional participants in the securities market.

Types of securities

The main types of securities are determined by law. These are government bonds, bonds, bills of exchange, checks, deposit and savings certificates, bearer bank savings books, bills of lading, shares, and privatization securities. Securities may also include other documents that are classified as securities by legislation on securities or in the manner established by it.<2>. For example, this is a mortgage<3> .

Issue-grade securities include shares, government bonds, bonds, other types of securities (including derivative securities) classified as issue-grade securities in accordance with the legislation of the Republic of Belarus on securities<4>. For some types of securities, see Table 1.

Table 1

Intermediary transactions with securities

Professional activities in the securities market include, inter alia, entrepreneurial activities in carrying out intermediary transactions with securities (including derivative securities) in the interests of a client in order to generate income (with the exception of transactions made for the purpose of obtaining income in the form of interest and ( or) discount or dividend, including by professional participants in the securities market)<5>. Please note that derivative securities are securities that certify rights and (or) establish obligations to purchase or sell other securities<6>. For example, these are futures, options and issuer options<7> .

For intermediary transactions with securities, they usually turn to professional participants in the securities market who have a special permit (license) to carry out professional and exchange activities in securities, which specifies one or more types of professional activities: brokerage, dealer, activity on trust management of securities papers<8> .

Note
The purchase and sale by organizations that are not professional participants of the securities market of securities through the mediation of a professional participant of the securities market (in accordance with an agency, commission or trust agreement) does not relate to professional and exchange activities in securities<9> .

For more information on intermediary transactions with securities, see Table 2.

Table 2

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Lecture№ 1 0

OperationscommerciallytheirbankovWithvaluablepapers

1. Issue by the bank of its own securities

2. Investment operations of a commercial bank

3. Intermediary operations of a commercial bank with securities

1. Issuebankownvaluablepapers

investment valuable commercial bank stock

According to the Civil Code of the Russian Federation (Article 143), securities include: bonds, bills, checks, deposit and savings certificates, bank savings books bearer, bills of lading, shares, privatized securities, etc.

The activities of commercial banks in the stock market are regulated by the Law “On the Securities Market” and other laws and regulations.

Commercial banks in the securities market act as issuers of securities, investors and intermediaries in transactions with securities.

Bank issuing operations is the activity of issuing a bank's own securities. Current legislation allows commercial banks to issue the following types of securities: shares, bonds, checks, bills, certificates of deposit and savings, derivative securities.

By issuing bonds, commercial banks attract additional borrowed funds. By issuing bills, checks, deposit and savings certificates, commercial banks fulfill one of their main purposes - the accumulation of funds and the creation of means of payment.

The purpose of issuing shares is to form the authorized capital. Attraction of additional capital by joint-stock banks can be carried out by placing additional shares. The bank can issue registered and bearer shares. Ordinary and preferred shares may also be issued.

Release and placement bank shares regulated federal law“On Joint Stock Companies” and Instruction No. 8 of the Central Bank of the Russian Federation dated September 17, 1996, according to which all issues of securities, regardless of the size of the issue and the number of investors, are subject to state registration.

2. Investmentoperationscommercialjar

Investments -- long-term investments in industry, agriculture and other sectors of the economy at home and abroad in order to make a profit. Direct investment is a direct investment of funds in production, the acquisition of real assets, portfolio investment is a form of purchasing securities (securities portfolio) or providing funds for a long-term loan (loan portfolio).

Investment operations of a bank are investments of cash and other bank reserves in securities, real estate, authorized capital of enterprises and other investment objects, market value which is capable of growing and generating income for the bank in the form of interest, dividends, and profit from sales.

Goals of the bank's investment policy:

1. expansion of influence, incl. beyond the scope of purely banking activities,

2. expansion and diversification of the bank’s revenue base,

3. the bank’s presence in the most dynamic market - the securities market,

4. downgrade general risk bank by expanding its activities,

5. expansion of the client base,

6. expansion of the types of services provided to clients.

The process of making investment decisions by a commercial bank in the securities market is the formation of a securities portfolio (planning, analysis and regulation of the composition of the securities portfolio, portfolio management while maintaining the required level of liquidity, risk and minimizing costs).

Portfolio investing consists of the following stages:

1. choosing and formulating your own strategy. Types of strategies:

Constant cost strategy. In this case, when managing the portfolio, the total value of the portfolio will be maintained at the same level, which is achieved either by withdrawing the profits received or by depositing additional funds in case of losses.

Constant proportions strategy. With this strategy, the same relationships between the individual components of the portfolio are maintained for a certain period of time. The portfolio structure by which proportions are established

It can be determined by the following criteria: the level of riskiness of securities, types of securities, industry or regional affiliation of the issuer of securities, etc. As a result of the movement of market prices for the securities included in the portfolio, the established ratio is violated, the bank sells securities whose share has increased, and with the proceeds buys securities whose share has fallen.

Floating proportions strategy. It consists of establishing varied (but not constant) relationships between the desired proportions of the portfolio.

Based on the degree of acceptable risk, the following types of strategies are distinguished:

Aggressive strategy. In this case, a high return on investment is allowed and high risk, the object of investment is usually stocks, high-yield bonds of unreliable issuers and other risky assets.

Balanced strategy. In this case, an even distribution of high-risk and low-risk assets is maintained, i.e. in the event of unforeseen difficulties, their sale on the secondary market is carried out with minimal losses.

A conservative strategy involves a minimum degree of risk with special attention to the reliability of securities.

2. determination of investment policy. Investment policy -- a set of measures aimed at implementing a strategy for selecting and managing an investment portfolio, achieving an optimal combination of investment instruments in order to increase the profitability of operations, maintaining an acceptable level of riskiness and liquidity. The bank’s choice of investment policy should be based on the following:

Determining a set of efficient investment portfolios that have the highest expected return for any degree of risk and the lowest level of risk for any expected return;

Selecting the best investment portfolio for a given bank;

Quick response to the appearance of new instruments on the investment market, active participation in both the exchange and over-the-counter markets;

Compliance of the bank's investment policy with the economic situation in the country.

3. comprehensive market analysis. Comprehensive analysis of the financial market consists of selecting financial instruments that meet the requirements of investment policy.

4. formation of a starting portfolio. Having decided on the strategy and the degree of acceptable risk, you should outline the range of assets that can be included in the investment portfolio. Based on the types of securities included, portfolios are divided into portfolios of shares (any), portfolios of ordinary shares, portfolios of preferred shares, portfolios of bonds (any), portfolios of municipal bonds, portfolios of government bonds, mixed portfolios.

5. portfolio restructuring. Portfolio restructuring carried out in accordance with the recommendations of the selected model, as well as taking into account real market conditions and restrictions. In addition, at this stage, if necessary, the portfolio model can be adjusted based on changes in the market and taking into account the current effectiveness of portfolio management.

When forming a portfolio, an investor should take into account a large number of risk factors, but it is important to divide them into two groups: market (this includes all the main risks that can change the overall situation on the market) and portfolio risks (inherent only in financial instruments included in the investor’s portfolio) risks . Ways to reduce investment risk are:

1. diversification, i.e. inclusion of the largest number of securities in the portfolio. The more different instruments are included in an investor's portfolio, the more the portfolio dynamics will be similar to the dynamics of the market as a whole. Thus, diversification is the simplest and most reliable way to reduce the specific risks inherent in individual investment portfolios.

2. hedging. Hedging -- risk insurance against unfavorable price changes, carried out through counter purchases (sales) of futures contracts.

In practice, an investor cannot reduce market risks; he can only choose the moment to enter the market when such risks are minimal, or hedge part of the risks through derivatives financial instruments. Specific portfolio risks can be regulated. So, if an investor seeks to reduce them, then the easiest way to achieve this result is the maximum possible diversification of investments.

The criteria for determining the structure of a bank's investment portfolio are the profitability and riskiness of operations, the need to regulate balance sheet liquidity and diversification of assets.

After selecting and forming a banking portfolio, a very important stage lies ahead, which consists in skillfully managing the set various types securities in order not only to preserve value, but also to obtain significant income that is not dependent on inflation. There are two main ways of managing investment portfolios: active and passive.

Active management is characterized by forecasting the size of possible income from invested funds, the ability to carry this out more accurately and quickly than the financial market, i.e. the ability to anticipate and get ahead of events. In this case, when the difference in expected income, caused by either a successful or an erroneous decision or due to changes in market conditions, disappears, the components of the portfolio or the entire portfolio are replaced by others.

Banks that use proactive tactics track and purchase the best-performing securities and try to get rid of low-yielding assets as quickly as possible. Such management has the international equivalent of “swaping”, which means constant exchange and rotation of securities through the financial market. The following main forms of active management are distinguished:

The selection of "net" income is a method when, for example, a bond with more low income, but is purchased with a higher one.

The substitution consists in the fact that neither similar, but by no means identical securities are exchanged, having the same yield, but a different circulation period (bonds).

Sector swap, with this method, bonds are moved from different sectors of the economy, with different durations, income, etc.

Discount rate anticipation is the effort to lengthen the portfolio's life when rates fall and shorten the portfolio's life when rates rise. Moreover, as the life of the portfolio increases, its price is more susceptible to changes in discount rates.

Passive control banking investment portfolio is based on the assumption that the stock market is quite effective when choosing securities or taking into account time. This tactic creates well-diversified portfolios with a predetermined level of risk and long-term holding of portfolios in an unchanged state. Their advantages include low turnover, minimal levels of overhead costs and investment risk. The benchmark for passive management is an index fund, acting in the form of a portfolio created to mirror the movement of the selected index, characterizing the state of the entire securities market.

3. IntermediaryoperationscommercialjarWithvaluablepapers

Acting as intermediaries in transactions with securities, commercial banks provide a range of services:

1. raising funds for production development, incl. underwriting - subscription, initial placement of shares of issuing companies, and before that analysis, evaluation and establishment of the preliminary price of the issued security. If a bank client needs to obtain financial resources for a long period of time (for the reconstruction of an enterprise, or for developing a new type of business, or for the construction of a new enterprise), he can turn to the bank for help, since banks are engaged in professional activities in the financial market. In this case, the bank is a financial consultant (most corporations maintain contact with only one bank and prefer to negotiate the terms of sale of their new issues of securities only with it), helping the client to attract financial resources, i.e. decide what is more appropriate: the use of credit resources, the creation of venture enterprises or the placement of securities.

If a company decides to make a public offering of securities for sale, the bank assists the company in setting the price and assessing the timing of the offering of securities for sale. The bank may make an initial placement of securities based on maximum conditions or based on guaranteed placement for the issue of securities. With a guaranteed subscription to an issue, the company actually receives a guarantee of placement of securities, since the bank agrees to buy the entire issue and then sell it in parts to its clients (this transaction is formalized by an underwriting agreement, which may combine agency agreements, guarantees, consulting services agreements, loan agreements, etc.). This allows the issuer to plan the allocation of capital to be raised without fear that the entire issue of securities will be unsold. Some banks often act as large underwriters of securities, while others limit themselves to relatively small amounts.

2. transactions on mergers, acquisitions and restructuring of enterprises. Banks can be involved in these transactions through:

Participation in the organization of a merger;

Assisting target companies in developing and implementing defense tactics;

Conducting a target assessment of the acquired company,

Participation in financing the merger.

Target firms that do not want to be acquired usually enlist the help of banks and law firms that specialize in blocking mergers. Many mergers are financed by the acquiring company's free cash flow. Since this is not always possible, there is a need for sources of funds to pay for the target company. The bank prepares financial forecasts and estimates for the company in order to determine the amount of debt that the company is able to service; Together with the company, they develop a financing plan (the missing investments are made by the bank), i.e. in this case, the bank works in two directions: traditional banking operations (credit operations) and analytical work related to investments.

3. formation and management of investment portfolios of clients;

4. working with investor clients to provide information about the current market situation in order to make an informed investment decision;

5. brokerage and dealer operations. Brokerage is the activity of making transactions with securities as an attorney or commission agent. A broker, on behalf of his clients, buys and sells securities for them. The need for such mediation is due to the fact that the high professionalism of the broker should help achieve the best result for the investor and protect the latter from a number of risks inherent in the market. The broker performs its functions for a fee (commission).

As a rule, the broker provides the following set of services to the client:

Providing information about the issuer, the market situation, consulting;

Concluding transactions based on client instructions;

Execution of transactions (receipt of security certificates for the client, re-registration of rights in the register and depository in the name of the client or buyer, nominee holder).

The dealer carries out transactions with securities on the exchange on his own behalf and at his own expense by publicly announcing the purchase and/or sale prices of certain securities. The dealer works on the basis of an offer, i.e. an offer addressed to a potentially unlimited number of persons to conclude a transaction on the terms of the offer. Any person, expressing his consent to the offer, thereby concludes a transaction, and the dealer is obliged to fulfill it. Refusal to execute a transaction by a dealer on the terms announced by him is not allowed. The proposal (offer) must stipulate the essential terms of the transaction at the discretion of the dealer. As a rule, it includes the purchase and/or sale price, the minimum (maximum) volume of one transaction, the validity period of the offer, the procedure for transferring securities and payment. The dealer receives income from the spread, those. due to the difference in purchase and sale prices. As a rule, in a competitive environment, spreads are set at a fairly small level (a fraction of a percent), so the opportunity to generate income lies in increasing turnover. Dealer activity helps to increase market liquidity.

6. depository operations. Depository -- an organization that stores the securities of its clients and services these securities (collection and distribution of interest, dividends, etc.). Big role servicing the securities market is played by the bank's depository activities . It consists of providing services for storage, guardianship, trusteeship of client securities certificates and/or accounting for the transfer of rights to them. The content of depository activities is to ensure ease of use and transfer of securities, reduce transaction risks, and simplify the processing of information about securities, the rights they provide and their owners. The relationship between clients and depositories is based on the transfer (issuance) of orders to them to carry out certain transactions with securities, including on the basis of documents confirming the implementation of purchase and sale transactions. Depositories receive a fee for their services.

So, bank Maybe perform V quality consultant client, V in particular relatively secondary emissions shares (private And public accommodation), release corporate bonds, restructuring assets, A Also V quality depository. Bank must give clients informational, legal, analytical service. All these operations directed on increase profitable parts jar, promotion financial sustainability And demotion general risk jar.

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