3 Trading on Securities Markets, Parts 1 and 2

3 Trading on Securities Markets, Parts 1 and 2 - Securities...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
Comm367 1 Securities Markets (Part 1)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Comm367 2 Importance of Financial Markets (Review) Help firms and governments raise cash by selling securities Channel funds from savers to borrowers Provide a place where investors can act on their beliefs Help allocate cash to where it is most productive
Background image of page 2
Comm367 3 Primary vs. Secondary Markets (Review) u Primary market New issue Issuer receives the proceeds from the sale u Secondary market Existing owner sells to another party Issuing firm doesn’t receive proceeds and is not directly involved
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Comm367 4 Primary Markets (Review) u New securities are issued in a primary market Initial public offering (IPO) versus “seasoned” new issue IPO – Common stock shares of a company being sold for the first time u Issue facilitated by investment dealers Specialists in advice, design, and sales Intermediaries between issuer and investor
Background image of page 4
Comm367 5 Primary Market Structure
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Comm367 6 Investment Bankers (Dealers in Canada) u Client advice includes type and features of security, offer price, and timing of sale u Underwriting services: Risk of selling to investors assumed from issuer u Coordinate marketing by helping issuer register securities, issue prospectus, and sell securities
Background image of page 6
Comm367 7 Investment Banking Arrangements (Review) u Firm commitment vs. “Best Efforts” Firm commitment: the underwriter assumes full responsibility for selling new issues Best Efforts: no firm commitment u Negotiated vs. Competitive Bid Negotiated: issuing firm negotiates terms with investment banker
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Comm367 8 Public Offerings Public offerings: registered with the OSC (Ontario - SEC in USA) and sale is made to the investing public Red herring: preliminary prospectus Prompt Offering Qualification (POP) System allows senior reporting issuers to sell new securities over time via “short form”
Background image of page 8
Comm367 9 Private Placements u Private placement: sale to a limited number of sophisticated investors not requiring the protection of registration u Dominated by institutions u Very active market for debt securities u Not active for stock offerings
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Comm367 10 Current Issues Related to Public u Underpricing in the IPO markets Who benefits/suffers from the underpricing? u Alternative approach to IPO: auction IPO of Google in 2004 u Private equity buyout: reverse of IPO
Background image of page 10
Comm367 11 Types of Markets u Direct search markets u Brokered markets Block transactions u Dealer markets/negotiated markets consist of decentralized dealer network u Auction markets involve bidding in a specific physical location buyers and sellers regularly trade with each other without the intermediation of dealers
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Comm367 12 Stock Exchanges Toronto Stock Exchange (TSX/ME) is a secondary auction market for equity securities Largest Canadian stock market Listing requirements for traded firms TSX Venture Exchange is Canada’s “junior” stock market New York Stock Exchange (NYSE) is the largest secondary market in the
Background image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 45

3 Trading on Securities Markets, Parts 1 and 2 - Securities...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online