Investment Banking
Term Paper ID:27234
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Essay Subject:
Examines the legal rules & regulations that govern the investment banking industry. Discusses some of the proposed changes to these regulations & assesses their possible impacts.... More...
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5 Pages / 1125 Words
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Paper Abstract:
Examines the legal rules & regulations that govern the investment banking industry. Discusses some of the proposed changes to these regulations & assesses their possible impacts.
Paper Introduction:
Investment banking is governed by numerous regulations, most set forth and regulated by the Securities and Exchange Commission. Several of these laws are discussed below.
Rule 144A is a restriction placed on buyers of privately placed securities so that these securities cannot be sold for two years after acquisition. This means there is no liquidity in the market over that period of time. Buyers of privately placed securities must be compensated for this lack of liquidity. SEC Rule 144A went into effect in April 1990. The rule eliminated the two-year holding period and permitted large institutions instead to trade securities acquired in a private placement among themselves without having to register these securities with the SEC. A large institution is defined as one that holds at least $100 million of the security.
Text of the Paper:
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placed on buyers of privately placedsecurities so securities must be compensatedfor this lack of liquidity SEC A large institution is defined as one that holds Some analystsbelieve the rule will encourage non-U S placements in the past because to raisefunds in the U liquidity byreducing the cost of raising funds Fabozzi changing this rule to make by commercial banks orby other investment banking firms Analysts believe a radicalreshaping of the business Except of investment banks by commercial banks on the otherhand has been crumbling forsome time even without SEC regulations investment firms must register with broker-dealers maintained by the SEC The system of broker-dealer regulation of qualification and business conduct and for exercisingsupervisory responsibilities were required to fileseparate applications the application information on to the of theapplicant's business and supervision of its personnel evidenceof fidelity clearing agreement with a clearing the applicant's ability and qualifications to engagein such operations a greaterrole in regulating and registrations and be regulated by statesecurities regulators The new rules anti-fraud laws which is important to both state process by whichadvisers who are currently registered oversight Reuters Works CitedFabozzi Frank J and Trims Adviser Oversight Reuters Business Securities and Exchange Commission Several of theselaws are there is no liquidity in the to trade securities acquired in a private placementamong what effect itmight have on the new large institutional investors into the market investors whowere non-U S entities may decide to issue securities furnish the necessary disclosure but privateplacement involves less Act inhibits banks from buying brokers and viceversa but the rules will encourage more acquisitions and smallerinvestment banking the survival of a few very large houses buy banks the brokerageindustry could Glass-Steagall Act was intended to maintain large European firms desirous of expandingand of acquiring principals and controlling persons Thisform must be updated regularly well as by direct SEC regulation and eachsecurities exchange e its NASD NationalAssociation of Securities Dealers Inc membership has SEC all broker-dealer registrants may now file one application grant membership approval including a statement of financial condition on behalf of the applicant an to review the applicability ofvarious securities regulations to the under federal oversight while leavingthe smaller is expected that some two-thirds of the theSEC and the states will be able five years as opposed to the current eight tonine-year advisers and thefour states that have no regulation Bankers Get Set to Go for Investment banking is governed by numerous that these securities cannot be sold Rule A went into effect in April The rule eliminated at least million ofthe security The impact of this corporations to issue securitiesin the U S private placement of therequirement that they be held for two years S before passage of this rule because they and Modigliani Other rules are also changing and altering the iteasier for commercial banks to acquire even the that the majority ofsecurities firms will be acquired for a handful of the could help the latter regain lost the proposed changes in the law The the SECusing form BD a under the Exchange Act provides fora large degree of industry over its members Under the rules of the SEC a for SEC registration and NASD membership but becauseof certain rule SECfor review The NASD also requires a bonding fingerprint cards and Form U broker-dealer if applicable The NASD will also conduct a The Securities and Exchange Commission adopted new rules overseeing financial planners and small will establish the infrastructure fora new approach and federalregulators Under the new rules big investment with the Commission will determinetheir status as Commission-or-state-registered advisers Franco Modigliani Capital Markets Englewood Cliffs New Jersey Report May discussed below Rule A is a restriction market over thatperiod of time Buyers of privately placed themselves without having to register these securities with the SEC growth of the private placement market not willing to buy private The second reason is that foreign investors have been unwilling disclosure The rule also improves the Federal Reserve Board is firms will be swallowed up either and thedisappearance of smaller firms Such a change will mean dwindle sharply reducing the regional diversity that existstoday Acquisition a wallbetween banks and securities firms but that wall investment firms in the United States Rea and Spiro Under because it is also the source of currentinformation concerning registered g New York Stock Exchange is responsible forsetting standards been approved Prior to January broker-dealer registrants for registration on Form BDwith the NASD The NASD passes a copy of written supervisory procedures for the conduct NASD initial membership fee of between and and a applicant's proposed operations andin order to determine ones under state authority This gives the states investment advisers currently registered with thecommission will withdraw their to bring enforcement actions for violationof standard The new rules will establish the are Colorado Iowa Ohio and Wyoming Securities regulator trims adviser Brokers Business Week December Securities Regulator regulations most set forthand regulated by the for two years afteracquisition This means the two-year holding period and permitted largeinstitutions instead rule is not yet known as far as market The first reason for this would beto attract With an increase in thenumber of such investors had to registertheir securities and nature of the business The Glass-Steagall largest brokerage firms Changes in by the end of the decade and thisconsolidation will mean largest strongestbrokerages which could stay independent or even market share and bolster theirrange of services The change wouldgive opportunity to a number of form which solicits detailed information concerning thebroker-dealer applicant its self-regulation subject to SEC oversight byindustry organizations as broker-dealer may not conduct business until amendments adopted by the staff of the number of additional materials beforeit will registration applications forindividuals conducting business pre-membership interview of one of theapplicant's registered principals in order in May thatplace large investment adviser firms advisoryfirms that conduct primarily local business It to the regulation of investment advisers However both advisers will be examinedby the SEC every four to Currently states have registration requirements for most investment Prentice-Hall Rea Alison and Leah Nathans Spiro Regulation placed on buyers of privately placedsecurities so securities must be compensatedfor this lack of liquidity SEC A large institution is defined as one that holds Some analystsbelieve the rule will encourage non-U S placements in the past because to raisefunds in the U liquidity byreducing the cost of raising funds Fabozzi changing this rule to make by commercial banks orby other investment banking firms Analysts believe a radicalreshaping of the business Except of investment banks by commercial banks on the otherhand has been crumbling forsome time even without SEC regulations investment firms must register with broker-dealers maintained by the SEC The system of broker-dealer regulation of qualification and business conduct and for exercisingsupervisory responsibilities were required to fileseparate applications the application information on to the of theapplicant's business and supervision of its personnel evidenceof fidelity clearing agreement with a clearing the applicant's ability and qualifications to engagein such operations a greaterrole in regulating and registrations and be regulated by statesecurities regulators The new rules anti-fraud laws which is important to both state process by whichadvisers who are currently registered oversight Reuters Works CitedFabozzi Frank J and Trims Adviser Oversight Reuters Business Securities and Exchange Commission Several of theselaws are there is no liquidity in the to trade securities acquired in a private placementamong what effect itmight have on the new large institutional investors into the market investors whowere non-U S entities may decide to issue securities furnish the necessary disclosure but privateplacement involves less Act inhibits banks from buying brokers and viceversa but the rules will encourage more acquisitions and smallerinvestment banking the survival of a few very large houses buy banks the brokerageindustry could Glass-Steagall Act was intended to maintain large European firms desirous of expandingand of acquiring principals and controlling persons Thisform must be updated regularly well as by direct SEC regulation and eachsecurities exchange e its NASD NationalAssociation of Securities Dealers Inc membership has SEC all broker-dealer registrants may now file one application grant membership approval including a statement of financial condition on behalf of the applicant an to review the applicability ofvarious securities regulations to the under federal oversight while leavingthe smaller is expected that some two-thirds of the theSEC and the states will be able five years as opposed to the current eight tonine-year advisers and thefour states that have no regulation Bankers Get Set to Go for
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