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    Role of Investment Banking in Financial Market ?

    What does an invesment bank do ?
    • Raise capital for clients
    • Advise corporations, states or entities on capital structure, strategy, business combinations.
    • Create and sell securities to institutional and retail clients.
    • Manage money for institutional and retail clients.
    • Trade on proprietary basis.

    Importance of investment banking
    • Helps the corporations in raising capital. It facilitates the trading in securities thereby increasing the liquidity of the securities.
    • It provides investment opportunities to the individual or entities.
    • Most of the corporations get advisory services from the investment bank regarding the mergers, acquisitions and divestiture.

    Structure of investment banking
    Investment banks are organized into 3 categories.

    Front office

    • Helping customers raise funds in the capital market and advise on mergers and acquisitions.
    • professional management of various securities and other assets.
    • Buying and selling financial products with a goal of making money on each trade.
    • Creating and marketing financial products.
    • researching industries, companies and products.

    Middle office

    • analyzing credit and market risk for banks.
    • Making sure operations are complying with regulations.
    • Responsible for capital management and risk monitoring.

    Back office

    • Making sure the bank runs smoothly by submitting trades, maintaining database and transacting required money transfer.
    • The information technology department.

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