ELEMENTS OF FINANCIAL SYSTEM
FINANCIAL MARKET ([Link]
([Link]
Financial markets encompass any marketplace where securities are traded, such as the stock market,
bond market, currency market, and derivatives market, to name a few. Financial markets are necessary
for capitalist economies to function properly.
By allocating resources and producing liquidity for businesses and entrepreneurs, financial markets play
a critical role in facilitating the smooth operation of capitalist economies. The financial markets make it
simple for buyers and sellers to swap their assets. Financial markets create securities products that
provide a return to those with excess funds (investors/lenders) while also making these funds available
to those who require additional funds (borrowers).
By leveraging our extensive global network and excellent track record in emerging markets, as well as
expertise gained through experience in local markets, Standard Chartered Financial Markets Philippines
provides clients with innovative and customized solutions for risk management, financing, and
investment ideas.
The Financial Markets (FM) Philippines team's strengths include origination, structured and flow
sales, and FX and Rates trading, allowing them to provide a broad range of fixed income, currencies,
commodities, and capital markets solutions. For both cross-border and domestic clients, our Securities
Services provide a spectrum of high-quality goods, efficient delivery systems, and great client support.
We give the simplicity of working with a single source for all of their banking needs thanks to our
network and wide choice of commercial banking solutions.
TYPES OF FINANCIAL MARKET
1. Stock Markets
Stock exchanges are perhaps the most well-known financial marketplaces. Traders and investors
buy and sell stocks on these exchanges. Companies utilize stock markets, also known as equities
markets, to obtain cash through an initial public offering (IPO), with shares then exchanged in a
secondary market among numerous buyers and sellers.
Market makers (MMs) and specialists who maintain liquidity and provide two-sided markets are
typical players in a stock market, as are (both retail and institutional) investors and traders.
Brokers are independent third parties who facilitate trades between buyers and sellers without
taking a position in the stock.
2. Money Markets
Money markets, in general, trade in highly liquid short-term maturities (less than one year) and
are characterized by a high level of safety and a low rate of return on investment. The money
markets feature large-volume trading between institutions and traders at the wholesale level.
Money market mutual funds purchased by individual investors and money market accounts
opened by bank customers are examples of retail money market mutual funds. Individuals can
invest in the money markets by purchasing short-term certificates of deposit (CDs), municipal
bonds, or U.S. Treasury bills. Treasury banknotes, for instance.
3. Forex Market
Participants in the forex (foreign exchange) market can purchase, sell, hedge, and speculate on
the exchange rates between currency pairings. Because cash is the most liquid of assets, the FX
market is the most liquid market in the world. The currency market processes more daily
transactions than the futures and stock markets combined. The forex market is decentralized,
just like the OTC markets, and is made up of a global network of computers and brokers from all
over the world. Banks, commercial firms, central banks, investment management firms, hedge
funds, and retail forex brokers and investors all participate in the forex market.
4. Commodities Markets
Commodities markets are gathering places for producers and consumers to trade physical
commodities like maize, livestock, and soybeans, as well as energy goods (oil, gas, and carbon
credits), precious metals (gold, silver, and platinum), and "soft" commodities (such as cotton,
coffee, and sugar). Spot commodities markets are those where tangible things are exchanged
for money. However, the majority of these commodities are traded in derivatives markets,
which use spot commodities as the underlying assets. Commodity forwards, futures, and
options are traded both OTC and on regulated exchanges such as the Chicago Mercantile
Exchange (CME) and the Intercontinental Exchange (ICE) (ICE).
FINANCIAL INSTRUMENT ( [Link]
([Link]
Financial instruments are tradable assets, or capital bundles that may be traded. The majority of
financial products allow for efficient cash flow and transfer between investors all over the world.
Currency, a contractual right to give or receive cash or another sort of financial instrument, or proof of
ownership of a business are all examples of assets.
Financial instruments are real or virtual papers that constitute a legal arrangement involving
money of any type. Asset ownership is represented via equity-based financial instruments. An investor
makes a loan to the asset's owner through debt-based financial instruments.
TYPES OF BONDS
1. Simple bonds
Bonds issued by corporations are a viable source of capital. Bonds are, in fact, long-term loans.
They are negotiable and provide the bearer with a fixed (or variable) rate of interest. "Zero-
coupon bonds" do not pay interest, but they do pay a redemption premium to their holders at
the end of their tenure. "Term bonds" guarantee a single payment of interest (in fine). This
approach allows for the capitalization of interest that would otherwise be paid annually. Any
interest or redemption premium paid in the context of a simple bond is deducted from the
borrowing company's taxable base.
2. Compounds bonds
Variable interests or rights might be included in these bonds.
3. Convertible bonds
The bearers of this sort of bond earn a predetermined rate of interest and can become
shareholders of the company to which they are lending if the issue contract's conditions are
met. The bearer loses the status (legal and economic) of lender as soon as the bonds are
converted into shares (but keeps the status of shareholder). Convertible bonds have a set rate of
interest that is tax deductible for the lending firm. Bonds converted into shares can sometimes
be issued without granting fixed rights, as long as the bearer's conversion option is equal to the
interest due.
4. Profit Participative Bonds
The holder of these bonds is entitled to a portion of the borrowing company's annual profit
and/or the profits of its liquidation. Fixed-interest rights can be granted by these bonds. Profit
participation therefore becomes a variable interest. The interest paid by the borrowing firm, on
the other hand, is not tax deductible. Indeed, this sort of bond resembles a stock in that the
interest paid is treated as a dividend distribution.
FINANCIAL INSTITUITION ([Link]
([Link]
A financial institution (FI) is a firm that specializes in financial and monetary transactions such
deposits, loans, investments, and currency exchange. Financial institutions, which include banks, trust
companies, insurance companies, brokerage firms, and investment dealers, cover a wide range of
commercial operations in the financial services sector.
Financial institutions provide services to the majority of people in some way, as financial
operations are an important element of any economy, with individuals and businesses relying on
financial institutions for transactions and investments. Because banks and financial institutions play such
an important role in the economy, governments feel it as essential to control and regulate them.
Financial institution failures have a history of causing panic.
Philippine Banks & Financial Institutions
• Asian Development Bank
• Asian Bank Corporation
• Bancnet
• Asia trust Bank
• Bank of the Philippine Islands
• BPI Family Bank
• Citibank
• Equitable Bank
• Far East Bank and Trust Company
• First Commercial Bank
• First People's Bank
• International Exchange Bank
• Land Bank of the Philippines
• Metropolitan Bank and Trust Company
• Philippine Banking Corporation
• PCI Bank
• Philippine Deposit Insurance Corporation
• Philippine National Bank
• Prudential Bank
• Rizal Commercial Banking Corporation
• Security Bank
• Solid Bank
• TA Bank of the Philippines
• Traders Royal Bank
• Union Bank
• United Coconut Planters Bank
• Urban Bank
FINANCIAL SERVICES ([Link]
Financial services are economic services offered by the finance industry, which includes credit unions,
banks, credit-card companies, insurance companies, accountancy firms, consumer-finance firms, stock
brokerages, investment funds, individual managers, and some government-sponsored organizations.
The presence of financial services enables a country's economic position to improve, resulting in
increased production in all sectors, resulting in economic growth.
People benefit from economic expansion in the form of economic prosperity, which means a higher
quality of living for each individual. It is here that financial services enable a person to acquire or receive
numerous consumer goods via hire purchase.
Importance of Financial Services
• Vibrant Capital Market.
• Expands activities of financial markets.
• Benefits of Government.
• Economic Development.
• Economic Growth.
• Ensures Greater Yield.
• Maximizes Returns.
• Minimizes Risks.
• Promotes Savings.
• Promotes Investments.
• Balanced Regional Development.
• Promotion of Domestic & Foreign Trade.
Financial Services offered by various financial institutions
• Factoring.
• Leasing.
• Forfaiting.
• Hire Purchase Finance.
• Credit card.
• Merchant Banking.
• Book Building.
• Asset Liability Management.
• Housing Finance.
• Portfolio Finance.
• Underwriting.
• Credit Rating.
• Interest & Credit Swap.
• Mutual Fund.
FINANCIAL PRACTICES ([Link]
The word "financial practices" refers to a collection of common methodologies or standard operating
procedures that you develop for accounting, financial reporting, budgeting, and other financial-related
tasks. Each one supports company policies, establishes accountability, and provides detailed directions
for accomplishing a task or activity. While SOPs are an important part of a solid financial management
program, it is the information contained in a SOP, not the SOP itself, that decides if the financial
procedures outlined are successful in achieving the desired result.
FINANCIAL TRANSACTION ([Link]
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A financial transaction is defined in the accounting industry as any activity that alters the value of an
organization's assets, liabilities, or equity. These are two-part transactions that include money in some
way and involve a buyer and a seller.
TYPES OF FINANCIAL TRANSACTION
1. Sales
Property is transferred from a buyer to a seller in exchange for money or credit in sales. Sales
transactions are documented as a debit to cash or accounts receivable and a credit to the sales account
in the seller's accounting journal.
2. Purchases
Purchases are the transactions that a company must make in order to receive the commodities or
services it needs to achieve its objectives. Cash purchases result in a debit to the inventory account and
a credit to the cash account. The debit entry would still be to the inventory account, and the credit entry
would be to the accounts payable account if the transaction was made with a credit account.
3. Receipts
Receipts are written confirmations of receiving or taking possession of a certain amount of goods or
money.
4. Payments
Payments are transactions in which a company receives money in exchange for a good or service. They
are recorded as a credit to cash and a debit to accounts payable in the accounting journal of the
business issuing the payment.
