Commercial paper and medium-term note (MTN) programs maintained by corporations, under which they can issue short-term and medium-term debt instruments on their own credit standing and more or less uniform legal documentation, have become good substitutes for bank credits. Financial institutions provide services in designing these programs, obtaining agency ratings, and dealing the securities into the market when issued. In recent years, MTN programs have become one of the most efficient ways for borrowers to tap the major capital markets. Underwriting of equity securities is usually heavily concentrated in the home country of the issuing firm, which is normally where the investor base and the secondary-market trading and liquidity is to be found. Corporations periodically issue new shares for business capital, but the principal source of new supplies of stocks to the market has come from government privatization programs. New issues of stocks may also https://www.easycorp.com.hk/en/accounting involve companies issuing shares to the public for the first time (IPOs), existing shareholders of large positions selling their holdings, and issues by companies of new shares to existing shareholders (rights issues). (iii) Privatizations. Sales of state-owned enterprises (SOEs) to the private sector became a major component of global wholesale financial services in the early 1980s. Privatizations generally involve the sale of the IPO of a large corporation, but they have also involved the sale of SOEs to corporate buyers, and substantial advice giving on how the processes should work to satisfy the public interests. They have run the gamut from state-owned manufacturing and service enterprises to airlines, telecommunications, infrastructure providers, and so on, using various approaches such as sales to domestic or foreign control groups, local market flotations, global equity distributions, sales to employees, and the like. (iv) Trading. Once issued, bonds, notes, and shares become trading instruments in the financial markets, and the underwriters remain active as market makers and as proprietary investors for their own accounts. Secondary-market trading is also conducted by investment bankers in other instruments including foreign exchange, derivative securities of various types, and commodities and precious metals. Trading 2 • 12 GLOBALIZATION OF THE FINANCIAL SERVICES INDUSTRY activities include market making (executing client orders, including block trades), proprietary trading (speculation for the firm’s own account), “program trading” (computer-driven arbitrage between different markets), and “risk arbitrage,” usually involving speculative purchases of stock on the basis of public information relating to pending mergers and acquisitions—a market traditionally dominated by commercial banks but increasingly penetrated by insurance companies and investment banking firms as well. (v) Brokerage. Agency business is an important and traditional part of the securities and investment banking industry. Its key area is brokerage, involving executing buy or sell orders for customers without actually taking possession of the security or derivative contract, sometimes including complex instructions based on various contingencies in the market. Brokerage tends to be highly oriented to retail as opposed to wholesale business, although many of the financial market utilities discussed below are aimed at providing more efficient vehicles for classic brokerage functions as they affect institutional investors. (vi) Investment Research. Research into factors affecting the various financial markets, as well as individual securities and derivatives, specific industries, and macroeconomic conditions, has become an important requirement for competitive performance in investment banking. Research is made available to clients by more or less independent analysts within the firm.