OTHER KINDS OF FINANCIAL INSTITUTIONS: HOW INVESTMENT BANK WORKS?

• SECURITIES FIRMS & INVESTMENT BANKS
• INVESTMENT COMPANIES
• PENSION FUNDS
SECURITIES FIRMS
• A company that facilitates financial market trades between buyers and sellers for a fee.
• Includes firms whose principal lines of business are in securities brokerage, financial advisory services,
investment banking and/or securities trading.
• Securities firms include investment banks, investment companies, and brokerage firms. They serve as financial
intermediaries in various ways. First, they play an investment banking role by placing securities (stocks and
debt securities) issued by firms or government agencies. That is, they find investors who want to purchase
these securities. Second, securities firms serve as investment companies by creating, marketing, and managing
investment portfolios. Finally, securities firms play a brokerage role by helping investors purchase securities
or sell securities that they previously purchased.
SECURITIES FIRMS CAN BE:
• Investment banks are often divided into two camps, the buy-side and sell- side, but many offer both buy-side and
sell-side services. The sell-side typically refers to selling shares of newly issued IPOs, placing new bond issues,
engaging in market-making services, or helping clients facilitate transactions. In contrast, the buy-side works with
pension funds, mutual funds, hedge funds, and the investing public to help them maximize their returns when
trading or investing in securities such as stocks and bonds.
What is the difference between investment banks and commercial banks?
INVESTMENT BANKS VS COMMERCIAL BANKS
INVESTMENT BANK
• Investment Bank Doesn't accept deposits
• Doesn't provide loans.
• Targets larger corporations and high net worth individuals
• Regulated by the country's security agency.
• Investment banks focus on helping businesses access capital markets

a) Brokerage Firm (brokerage) - a stock broker's business; charges a fee to act as intermediary between buyer COMMERCIAL BANK
and seller.
• Commercial Bank Accepts deposits
b) Bucket Shop - an unethical or overly aggressive brokerage firm.
• Provides loans Targets all consumers, small to large size corporations, and governments.
c) Non-depository Financial Institution - a financial institution that funds their investment activities from the
• Regulated by the country's central bank
sale of securities or insurance.
• Commercial banks primarily deal with deposit accounts and loans: for individuals and companies.
THE BROKER, DEALER AND BROKER- DEALER OF SECURITIES
HERE IS THE LIST OF TOP INVESTMENT BANKS IN THE PHILIPPINES
• Broker is an individual or a firm that conduct securities transactions on the part of their clients buying, selling,
or trading for the investment portfolio of their clients. (a) • ABCapital Inc. • Investment & Capital Corporation of the Philippines
• Dealers are people or organizations that buy or sell securities of their own portfolio (own account) and then • Asian Alliance Investment Corporation • Mabuhay Capital Corporation, Inc.
deal those securities to customers who are looking to buy them. (p) • Asian Focus Group Inc. • Medco Holdings, Incorporated
• Broker-dealers are organizations that do a combination of both of these services. They perform pretty much • BPI Capital Corporation • Navarro Amper & Co
all the middle-man functions of providing securities services to corporations and individuals alike, and they've
all but eliminated the need for organizations that specialize in either broker or dealer services. • Eastgate Capital Partners, Inc. • PNB Capital and Investment Corporation
• A special type of broker, called a discount broker, performs similar functions as broker- dealers, except that • First Abacus Financial Holdings Corporation • Insular Investment & Trust Corporation
they only perform the transactions, while broker-dealers often provide assistance by offering advice, analysis, • First Metro Investment Corporation • Punongbayan & Araullo SB Capital Investment Corp.
and other services that can help their customers make investment decisions. Discount brokers don't perform
• FSG Capital Inc. • Unioil Resources & Holdings Company Inc.
these additional services.

TOP 5 BEST STOCK BROKERS IN THE PHILIPPINES:

HOW SECURITIES FIRMS DIFFER FROM INVESTMENT BANKS? IN WHAT WAYS ARE THEY FINANCIAL INTERMEDIARIES?
• COL Financial
SECURITIES FIRMS AND INVESTMENT BANKS ACTIVITY AREAS:
• First Metro Sec.
• BDO Securities • Investing
• BPI Trade • Investment banking
• Market making
INVESTMENT BANKS • Trading
An investment bank is a special type of financial institution that aims to help companies access capital markets to raise • Cash management
money and take care of other business needs. A typical investment bank will engage in some or all of the following • Mergers & acquisitions
activities: Raise equity capital, raise debt capital, insure bonds or launching new products.