Chapter 7
Market Participants
7.1 INTRODUCTION
This chapter explains the roles that various types of companies and individuals play in the investment industry, and describes how each of these organisations and individuals interact with one another in the processes of placing orders, executing them, confirming executions and settling the resulting trades. The different organisations may be divided into the following broad categories:
1. Investors, including:
- Institutional investors such as pension funds and insurance companies
- Private investors
- Hedge funds
2. Institutional fund managers
3. Private client stockbrokers and investment managers
4. Investment banks that accept and execute orders from investors
5. Investment exchanges
6. Settlement agents, including
- Central counterparties, also known as clearing houses
- Central securities depositaries and international central securities depositaries
- Commercial banks that provide payment and custodian services
7. Others, including:
- Information vendors
- Money brokers
- Stock lending intermediaries
- Registrars and transfer agents.
Note that some large organisations act in multiple roles – for example, a large bank may be an institutional fund manager, a private client stockbroker, an investment bank and a commercial custodian all at the same time.
7.2 INVESTORS
Institutional investors include pension funds, insurance companies and fund management companies that manage investment schemes such as mutual funds, unit trusts and investment ...
