Introduction to Investment BankingJune 7, 2013
At its heart, Investment Banking is the job of the intermediary; it is the key link between buying and selling, raising and lending.
It’s hard to know what you want to do in life if you don’t know what is out there and one of Imarticus’s keys goals is to spread awareness of the different career possibilities in Corporate Finance. This will then help you understand the need for Investment Banking courses or Financial Analyst courses that will help prepare you for a career in this extremely competitive universe.
The term Investment Banking has gone through a sea change in the last two decades with it becoming almost synonymous with Financial Services. With the scope of commercial bank and traditional investment banks constantly overlapping, there is no one definition. With the repealing of the historical Glass Steagall Act of 1933 in 1999, the walls separating investment banking activities and commercial banking activities dissolved. Even traditional retail banks like ICICI and SBI have investment banking arms today. The crisis of 2008 however has thrown light on these conflicts and chinese walls are being adhered to more carefully now. The term Investment Banking however is a term still used loosely to describe any institutional financial services offering.
Traditional Investment Banking comprises of Mergers & Acquisitions (M&A) and Corporate Finance Advisory. In a broader sense however, it can also include the entire Securities industry, which includes Sales & Trading, Clearing and Corporate Support. Extending their scope even further, investment banks now offer Asset Management and Private wealth managed services as well. At its heart however lies the job of the intermediary, the key link between buying and selling, raising and lending.In the series we intend to break down Investment Banking not just into its academic components but its functions and careers. We will profile Front Office Analysts and Private Equity Analysts to understand what they do everyday. In our next installment we will understand the various functions, the concept of Buy Side and Sell – Side and delve a little into the world of Mergers & Acquisitions.
Did you know?
The Bombay Stock Exchange is the oldest exchange in Asia and can be traced back to the 1850s when four Gujaratis and one Parsi stockbroker would gather under the banyan trees in front of Mumbai’s Town Hall. While BSE Ltd is now synonymous with Dalal Street, it was not always so. The first venue of the earliest stock broker meetings in the 1850s was in rather natural environs – under banyan trees – in front of the Town Hall, where Horniman Circle is now situated. A decade later, the brokers moved their venue to another set of foliage, this time under banyan trees at the junction of Meadows Street and what is now called Mahatma Gandhi Road. As the number of brokers increased, they had to shift from place to place, but they always overflowed to the streets. At last, in 1874, the brokers found a permanent place, and one that they could, quite literally, call their own. The new place was, aptly, called Dalal Street (Brokers’ Street). The official organization became known as ‘The Native Share & Stock Brokers Association’. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE SENSEX in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading SENSEX futures contracts. The development of SENSEX options along with equity derivatives followed in 2001 and 2002, expanding the BSE’s trading platform. Historically an open outcry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition. This automated, screen-based trading platform called BSE On-line trading (BOLT) currently has a capacity of 8 million orders per day. The BSE has also introduced the world’s first centralized exchange-based internet trading system, BSEWEBx.co.in to enable investors anywhere in the world to trade on the BSE platform. (Extract from BSE Website)