FINANCIAL MARKETS

Dr. Marvin V. Lascano, CPA, CFC

Learning Objectives
Describe the financial systems and differentiate the
different types of financial markets

Identify the risks in the Financial Market and describe

the role of the Financial Regulators

Identify the money market instruments and their role

in the financial market
 SOURCES OF WEALTH

LAND CAPITAL ENTREPRENEURIAL

LABOR
SKILLS

SALARY / WAGES RENT INTEREST PROFIT

 ELEMENTS OF THE FINANCIAL SYSTEMS
FINANCIAL
INTERMEDIARIES

Household Household
Business
SUPPLIER OF
FUNDS
REGULATORY DEMANDERS OF
FUNDS
Business
Government Government
Foreigners
(Lenders) ENVIRONMENT (Borrowers)
Foreigners

FINANCIAL
MARKETS
 FINANCIAL INTERMEDIARIES
FINANCIAL
INTERMEDIARIES

DEPOSITORY INVESTMENT
INSTITUTIONS INTERMEDIARIES

• Asset Management Firms

• Commercial Banks • Regulated Investment Companies
• Thrift Banks • Exchange Traded Funds
• Savings Banks • Hedge Funds
• Insurance Companies • Separately Managed Funds
• Investment Banks
• Financing Companies
 FINANCIAL MARKETS
Local or Country’s
Instruments Traded Type of Market Financial Intermediation
Perspective

INTERNAL OR
MONEY PRIMARY
NATIONAL MARKET BROKER MARKET
MARKET MARKET
EXTERNAL OR DEALER
CAPITAL SECONDARY
INTERNATIONAL MARKET
MARKET MARKET
MARKET

FINANCIAL MARKETS
 RISKS IN FINANCIAL SYSTEM
Credit Risk

Legal Risk Liquidity Risk

FINANCIAL REGULATORS
ASSIGNMENT: SYSTEMS
! Who are the Financial
Regulators in the Philippines

Technological
Default Risk
Risk
 REGULATORS
Balance competitiveness

Manage the market behavior

Ensure consistency and fairness

Stabilize the market

 Financial Instruments

𝐹𝑎𝑐𝑒 𝑉𝑎𝑙𝑢𝑒 − 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑃𝑟𝑖𝑐𝑒 360

𝐴𝑛𝑛𝑢𝑎𝑙𝑖𝑧𝑒𝑑 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑅𝑎𝑡𝑒 = 𝑥
𝐹𝑎𝑐𝑒 𝑉𝑎𝑙𝑢𝑒 𝑇𝑒𝑛𝑜𝑟

𝐹𝑎𝑐𝑒 𝑉𝑎𝑙𝑢𝑒 − 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑃𝑟𝑖𝑐𝑒 365

𝐴𝑛𝑛𝑢𝑎𝑙𝑖𝑧𝑒𝑑 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑅𝑎𝑡𝑒 = 𝑥
𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑃𝑟𝑖𝑐𝑒 𝑇𝑒𝑛𝑜𝑟
Photo Credits: Corporate Finance Institute

Treasury Bills
 Financial Instruments
Buyer Seller RISK
Issuer will not
buy back at
Bond
Php1 Mn
the said
date?
*repurchase at
Php1.05 Mn
Issuer Fund provider

REPURCHASE COLLATERAL
(Security)
AGREEMENT
 Financial Instruments
Order of
Promissory
1,000 Payment
Note
Dec 17, 2020 (Draft)
Commercial Paper
recognized by the
Ten (10) Certificate of bank
Cheque
Deposit

Negotiable Certificate
of Deposit Commercial Paper Banker’s Acceptance
QUESTIONS!