Financial Services Essay
It is true that with the current business situation, financial business sector have been truly affected and in fact there are many companies are only trying to sustain heir existence through either limiting competitiveness or for worst trying to eliminate or reduce services standards and processes. In financial services field, there are some common terms and concepts that needed to be well understood in order to see how these impacts affects business most especially discussing their similarities as well as their differences.
The first one is corporate and mutual financial intermediaries these are two common types of financial funds that helps a company or certain individual in doing business. Commonality of these two is that they both are an intermediate financial assistance where you can use if you desire to have a business, the only difference is that in mutual funds, these are mostly own by a group of individuals who can themselves use to loan for business unlike for corporate, these are the bigger ones like banks.
Also in mutual funds, it may also consist of many members like in a company these are being given to employees by employers which will be given after retirement with interest. Deposit-takers and non-deposit-takers,
Need essay sample on "Financial Services"? We will write a custom essay sample specifically for you for only $ 13.90/page
Non-deposit takers such as building societies and credit unions or known as non-bank deposit takers are usually manage funds based from funds and this is the only source of funds use for investment, unlike for deposit takers, this is still through banks where most of its funds relies heavily from clients deposits. Deposit takers are still the most common financial institution around and what happened is that they manage clients’ money to invest on businesses with a promise of interest return for its client as well.
Unlike for non deposit takers, with their financial managers, investment only replies on funds, just the same investing into some promising business with interest return given to its member as well. (Dalziel and Cullen, 2007). Gilt repo market and the interbank market, these two are common market assistance for investment which has its own specific way of providing services to the public. In terms of similarity, both are money investing companies that provides assistance to potential investors and owners of business.
But for gilt repo market, where some of its common market participants includes: financial institutions, investors and intermediaries, they provide straightforward operation, where it operates in a very reduce stress manner because its source of funds may comes across government companies and agencies and even financial institutions unlike for interbank markets through bonds, it usually relies on the interoperability of bank in all of its location and its services are not as secure since it only replies on the way business grows and how impactful it may become in the current market situation.
(Choudhry, 2002:4-7). Bond and Equity, similarity between these two is that both are types of investment that can be done by an individual or a corporation. The only difference is that in a bond, it is like you are accepting or allowing your money to be invested by a company to the public, like if you are involved to some big multinational investment firm your money is being invested for government bonds.
Unlike for equity, this is like you purchased a new house and after a number of years you will sell that property and that will be computed based from its fair market value, which for most cases it increases like house and lot. Forward contracts and future contracts, these two are common types of contract applied in finance. For forward contract, it is said to be a private contract between the buyer and the seller where the buyer agrees to buy and the seller agrees to sell certain commodity that specified and agreed in the contract signed by both parties.
This is the simplest and most applied contract in business. On the other hand, future contract this is publicly traded or can the purchase or sale of loans, currency or commodity with actual delivery scheduled sometime in the future. (Forward and Future Contracts, 2009). In the send part of this paper, we will now be going into the mortgage products offered by some known financial companies, and one of those is Sun Life of Canada, some of its mortgage products being offered that are said to be stable up to the present are: commercial backup mortgage and residential backup mortgage.
In fact these can be sub divided into five different mortgage types: industrial, multi-family, office, retail and others. (See Figure 1). (Sun Life Financial Investment Overview Third Quarter 2008, 2008). Figure 1. Sun Life of Canada Mortgage Types In this figure above, you can see here that among the types of mortgage products that the company is offering retail mortgages still on the top, because there are still some small enterprises that gains through these kinds of products for them to support their business and operations.
Multi-family mortgages comes second obviously because there are still families with substantial earnings can avail of this products which can help improved lifestyle and personal needs of the families as a whole. In terms of risks between the lender and borrower, for the lender Sun Life it would be hard for retail business most especially if the business fell or families would reach issues in performing its promise to pay, and that could cause a lot of financial maneuvering and re-investment plans which will eventually will affect funds and from there affects business operation.
For the borrower, it is more of the risk for interest rate charges that will be given to them in cases for times of failure to perform agreed payment duties and dues. In terms of financial markets, there are still some products and initiatives that continuously become very evident that it improves lives of many people around us. One of the most prevalent improvements is micro financing, which has helped many small and medium enterprises in starting of small businesses. These initiatives are very popular for developing countries and most especially for underdeveloped countries.
It provides them learning as well as business opportunity in their own small towns and places which gives them enough assistance not only to themselves but also to their community. This also becomes one of the most stable grounds in the financial sector because most of these small enterprises have offered to these hard working clients and in return provides stability in financial institutions. (Selvavinayagam, 1995). At the last part of this paper, we get into the current situation on London Stock Exchange.
As the global economic problem is happening London Stock Exchange is not excluded from it and in fact it continues to be affected and admittedly that they are affected as well but just the same continues to strive hard and overcome such challenges like this one. In recent news, there was a buyback program dropped which also resulted to weaker outlook for the London Stock Exchange and this was in November 2008, as expected it was just one of the major moves that was acted by LSE whish could almost helped the business but instead fear in the trading volume may come early this year as commercial funds becomes weaker and weaker.
But, just the same business leaders and financial analyst still see hope as continued careful study on effective actions and initiatives are still carried on and optimistic views and globalization actions continue to take place, most especially as its performance in the previous years and even going back from the start of its existence have seen remarkable comeback and stability. (Morris, 2008). List of References Choudhry, Moorad (2002). The Repo Handbook (Securities Institute Global Capital Market). UK: Butterworth-Heinemann Dalziel, L. and Cullen, M. (2007).
Non-Bank deposit Takers to Come Under New Rules – Minister of Commerce and Minister of Finance Media Statement. Ministry of Economic Development. [Online] available from < http://www. med. govt. nz/templates/MultipageDocumentTOC____27720. aspx > [22, January 2009] Forward and Future Contracts. (2009). Financial Web, The Independent Financial Portal [Online] available from < http://www. finweb. com/investing/forward-and-futures-contracts-pt2. html> [23, January 2009] Morris, M. (2008). LSE shares fall as buyback programme dropped and outlook weakens. Telegraph. co.
uk [Online] available from < http://www. telegraph. co. uk/finance/newsbysector/epic/lse/3451415/LSE-shares-fall-as-buyback-programme-dropped-and-outlook-weakens. html> [23, January 2009]. Sun Life Financial Investment Overview Third Quarter 2008. (2008). SunLife USA. [Online] available from < http://forms. sunlife-usa. com/ga/get_file. cfm? form_id=19710> [23, January 2009] Selvavinayagam, K. (1995). Improving Rural Financial Markets for Developing Microenterprises. FAO. org. [Online] available from < http://www. fao. org/docrep/007/ae363e/ae363e00. htm> [23, January 2009]