| Date post: | 07-Jan-2016 |
| Category: |
Documents |
| Upload: | sanjit-sahoo |
| View: | 212 times |
| Download: | 0 times |
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 139
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $
Chapter 4
The Share Marketand the Corporation
Websites
wwwasicgovau
wwwasxcomau
wwwnysecom
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 239
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager 2
Learning bectives
bull Understand the nature of corporationsand their use of equity as a nancingtool
bull Describe the role of the stock market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 339
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager 3
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 439
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4 ntroduction
bull $hare market formal eampchange facilitating the issue+
buying and selling of equity securities
bull ublicly listed corporation company -hose shares are quoted and
traded on a formal stock eampchange $0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 539
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager amp
4 ntroduction $cont
bull rdinary share he principal form of equity issued by a
corporation -hich besto-s a claim toresidual cash o-s and o-nership andoting rights
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 639
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 739
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager (
4amp The ature o( the
Corporationbull he corporation di3ers from other
business forms -nership claims are -idespread and
easily transferable -ners shareholders0 do not a3ect the
daytoday a3airs of the company
$hareholder5s liability is limited to the
uncalled amount of the shares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 839
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager )
4amp The ature o( the
Corporation $contbull dantages of the corporate form
an obtain large amounts of nance for arelatiely cheap cost
he liquidity of securities facilitatesinestor diersication and encouragesinestment in corporate securities
$pecialised management can be chosendue to separation of o-nership andcontrol0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 939
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4amp The ature o( the
Corporation $contbull dantages of the corporate form
cont0 6erpetual succession57the corporate
form is una3ected by changes inmanagement or o-nership
he corporate form is suited to largescaleoperations
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1039
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $0
4amp The ature o( the
Corporation $contbull Disadantages of the corporate form
he primary disadantage arises due tothe separation of o-nership and control
onict of interest bet-een o-nersshareholders0 and mangers agents0 kno-n asagency theory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 239
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager 2
Learning bectives
bull Understand the nature of corporationsand their use of equity as a nancingtool
bull Describe the role of the stock market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 339
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager 3
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 439
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4 ntroduction
bull $hare market formal eampchange facilitating the issue+
buying and selling of equity securities
bull ublicly listed corporation company -hose shares are quoted and
traded on a formal stock eampchange $0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 539
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager amp
4 ntroduction $cont
bull rdinary share he principal form of equity issued by a
corporation -hich besto-s a claim toresidual cash o-s and o-nership andoting rights
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 639
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 739
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager (
4amp The ature o( the
Corporationbull he corporation di3ers from other
business forms -nership claims are -idespread and
easily transferable -ners shareholders0 do not a3ect the
daytoday a3airs of the company
$hareholder5s liability is limited to the
uncalled amount of the shares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 839
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager )
4amp The ature o( the
Corporation $contbull dantages of the corporate form
an obtain large amounts of nance for arelatiely cheap cost
he liquidity of securities facilitatesinestor diersication and encouragesinestment in corporate securities
$pecialised management can be chosendue to separation of o-nership andcontrol0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 939
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4amp The ature o( the
Corporation $contbull dantages of the corporate form
cont0 6erpetual succession57the corporate
form is una3ected by changes inmanagement or o-nership
he corporate form is suited to largescaleoperations
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1039
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $0
4amp The ature o( the
Corporation $contbull Disadantages of the corporate form
he primary disadantage arises due tothe separation of o-nership and control
onict of interest bet-een o-nersshareholders0 and mangers agents0 kno-n asagency theory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 339
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager 3
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 439
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4 ntroduction
bull $hare market formal eampchange facilitating the issue+
buying and selling of equity securities
bull ublicly listed corporation company -hose shares are quoted and
traded on a formal stock eampchange $0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 539
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager amp
4 ntroduction $cont
bull rdinary share he principal form of equity issued by a
corporation -hich besto-s a claim toresidual cash o-s and o-nership andoting rights
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 639
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 739
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager (
4amp The ature o( the
Corporationbull he corporation di3ers from other
business forms -nership claims are -idespread and
easily transferable -ners shareholders0 do not a3ect the
daytoday a3airs of the company
$hareholder5s liability is limited to the
uncalled amount of the shares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 839
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager )
4amp The ature o( the
Corporation $contbull dantages of the corporate form
an obtain large amounts of nance for arelatiely cheap cost
he liquidity of securities facilitatesinestor diersication and encouragesinestment in corporate securities
$pecialised management can be chosendue to separation of o-nership andcontrol0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 939
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4amp The ature o( the
Corporation $contbull dantages of the corporate form
cont0 6erpetual succession57the corporate
form is una3ected by changes inmanagement or o-nership
he corporate form is suited to largescaleoperations
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1039
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $0
4amp The ature o( the
Corporation $contbull Disadantages of the corporate form
he primary disadantage arises due tothe separation of o-nership and control
onict of interest bet-een o-nersshareholders0 and mangers agents0 kno-n asagency theory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 439
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4 ntroduction
bull $hare market formal eampchange facilitating the issue+
buying and selling of equity securities
bull ublicly listed corporation company -hose shares are quoted and
traded on a formal stock eampchange $0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 539
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager amp
4 ntroduction $cont
bull rdinary share he principal form of equity issued by a
corporation -hich besto-s a claim toresidual cash o-s and o-nership andoting rights
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 639
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 739
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager (
4amp The ature o( the
Corporationbull he corporation di3ers from other
business forms -nership claims are -idespread and
easily transferable -ners shareholders0 do not a3ect the
daytoday a3airs of the company
$hareholder5s liability is limited to the
uncalled amount of the shares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 839
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager )
4amp The ature o( the
Corporation $contbull dantages of the corporate form
an obtain large amounts of nance for arelatiely cheap cost
he liquidity of securities facilitatesinestor diersication and encouragesinestment in corporate securities
$pecialised management can be chosendue to separation of o-nership andcontrol0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 939
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4amp The ature o( the
Corporation $contbull dantages of the corporate form
cont0 6erpetual succession57the corporate
form is una3ected by changes inmanagement or o-nership
he corporate form is suited to largescaleoperations
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1039
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $0
4amp The ature o( the
Corporation $contbull Disadantages of the corporate form
he primary disadantage arises due tothe separation of o-nership and control
onict of interest bet-een o-nersshareholders0 and mangers agents0 kno-n asagency theory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 539
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager amp
4 ntroduction $cont
bull rdinary share he principal form of equity issued by a
corporation -hich besto-s a claim toresidual cash o-s and o-nership andoting rights
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 639
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 739
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager (
4amp The ature o( the
Corporationbull he corporation di3ers from other
business forms -nership claims are -idespread and
easily transferable -ners shareholders0 do not a3ect the
daytoday a3airs of the company
$hareholder5s liability is limited to the
uncalled amount of the shares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 839
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager )
4amp The ature o( the
Corporation $contbull dantages of the corporate form
an obtain large amounts of nance for arelatiely cheap cost
he liquidity of securities facilitatesinestor diersication and encouragesinestment in corporate securities
$pecialised management can be chosendue to separation of o-nership andcontrol0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 939
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4amp The ature o( the
Corporation $contbull dantages of the corporate form
cont0 6erpetual succession57the corporate
form is una3ected by changes inmanagement or o-nership
he corporate form is suited to largescaleoperations
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1039
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $0
4amp The ature o( the
Corporation $contbull Disadantages of the corporate form
he primary disadantage arises due tothe separation of o-nership and control
onict of interest bet-een o-nersshareholders0 and mangers agents0 kno-n asagency theory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 639
Copyright 2003 McGraw-Hill Australia Pty Ltd
Copyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 739
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager (
4amp The ature o( the
Corporationbull he corporation di3ers from other
business forms -nership claims are -idespread and
easily transferable -ners shareholders0 do not a3ect the
daytoday a3airs of the company
$hareholder5s liability is limited to the
uncalled amount of the shares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 839
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager )
4amp The ature o( the
Corporation $contbull dantages of the corporate form
an obtain large amounts of nance for arelatiely cheap cost
he liquidity of securities facilitatesinestor diersication and encouragesinestment in corporate securities
$pecialised management can be chosendue to separation of o-nership andcontrol0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 939
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4amp The ature o( the
Corporation $contbull dantages of the corporate form
cont0 6erpetual succession57the corporate
form is una3ected by changes inmanagement or o-nership
he corporate form is suited to largescaleoperations
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1039
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $0
4amp The ature o( the
Corporation $contbull Disadantages of the corporate form
he primary disadantage arises due tothe separation of o-nership and control
onict of interest bet-een o-nersshareholders0 and mangers agents0 kno-n asagency theory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 739
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager (
4amp The ature o( the
Corporationbull he corporation di3ers from other
business forms -nership claims are -idespread and
easily transferable -ners shareholders0 do not a3ect the
daytoday a3airs of the company
$hareholder5s liability is limited to the
uncalled amount of the shares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 839
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager )
4amp The ature o( the
Corporation $contbull dantages of the corporate form
an obtain large amounts of nance for arelatiely cheap cost
he liquidity of securities facilitatesinestor diersication and encouragesinestment in corporate securities
$pecialised management can be chosendue to separation of o-nership andcontrol0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 939
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4amp The ature o( the
Corporation $contbull dantages of the corporate form
cont0 6erpetual succession57the corporate
form is una3ected by changes inmanagement or o-nership
he corporate form is suited to largescaleoperations
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1039
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $0
4amp The ature o( the
Corporation $contbull Disadantages of the corporate form
he primary disadantage arises due tothe separation of o-nership and control
onict of interest bet-een o-nersshareholders0 and mangers agents0 kno-n asagency theory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 839
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager )
4amp The ature o( the
Corporation $contbull dantages of the corporate form
an obtain large amounts of nance for arelatiely cheap cost
he liquidity of securities facilitatesinestor diersication and encouragesinestment in corporate securities
$pecialised management can be chosendue to separation of o-nership andcontrol0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 939
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4amp The ature o( the
Corporation $contbull dantages of the corporate form
cont0 6erpetual succession57the corporate
form is una3ected by changes inmanagement or o-nership
he corporate form is suited to largescaleoperations
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1039
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $0
4amp The ature o( the
Corporation $contbull Disadantages of the corporate form
he primary disadantage arises due tothe separation of o-nership and control
onict of interest bet-een o-nersshareholders0 and mangers agents0 kno-n asagency theory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 939
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager
4amp The ature o( the
Corporation $contbull dantages of the corporate form
cont0 6erpetual succession57the corporate
form is una3ected by changes inmanagement or o-nership
he corporate form is suited to largescaleoperations
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1039
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $0
4amp The ature o( the
Corporation $contbull Disadantages of the corporate form
he primary disadantage arises due tothe separation of o-nership and control
onict of interest bet-een o-nersshareholders0 and mangers agents0 kno-n asagency theory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1039
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $0
4amp The ature o( the
Corporation $contbull Disadantages of the corporate form
he primary disadantage arises due tothe separation of o-nership and control
onict of interest bet-een o-nersshareholders0 and mangers agents0 kno-n asagency theory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1139
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $$
4amp The ature o( the
Corporation $contbull Disadantages cont0
(anagement may not hae strongincentie to act in the interests of theo-ners shareholders0 ie maampimiseshareholder alue share price0
(oderating inuences includebull Inestors5 ability to sell shares in a corporation
bull Dismissal from the board at 8( by shareholders
bull hreat of takeoer and loss of employmentbull Use of performance incenties like share options
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1239
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $2
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1339
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher iey
Slides prepared y Athoy Stager $3
4) The Stock xchange $S+
bull rimary role
bull $econdary role
bull Deriatie market role
bull Interest rate role
bull rading and settlement role
bull Information role
bull 9egulatory role
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1439
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Primary role
bull he $ facilitates the ecient andorderly sale of ne- nancial securities e- oatsinitial public o3erings Is0
Initial listing of a corporation on the $ 9ights issue
Issue of additional shares to eampistingshareholders on a prorata basis
lacements Issue of ne- shares to selected institutional
inestors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1539
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$amp
Primary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1639
Copyright 2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Secondary role
bull he $ facilitates trading in eampistingshares o ne- funds are raised by the issuing
company n actie+ liquid+ -ell organised secondarymarket increases the appeal of buyingne- shares in the primary market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$(
Secondary role (cont)
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$)
Derivative market role
bull he $ proides a market for tradingequityrelated deriatie products deriatie is a nancial security that
deries its price from an underlyingcommodity gold0 or nancial instrumentltosters shares0
Deriatie products can be ampchangetraded standardised0
erthecounter contracts unstandardised0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 1939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
$
Derivative market role (cont)
bull he $ proides a market for tradingequityrelated deriatie productscont0
Deriaties sere as a 9isk management tool hedge0
$peculatie instrument
Deriaties traded on the $ include
ptions =arrants
ltutures contracts
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
20
Interest rate role
bull he listing+ quotation and trading ofdebt securities on the $+ eg corporate bonds+ oating rate notes
lt9s0+ conertible notes+ preferenceshares
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2$
Interest rate role (cont)
bull his role adds alue to to a debt issuedue to ransparency
ase of entry gtiquidity
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
22
Trading and settlement role
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 lients5 orders are eampecuted ia computerfrom the broker5s oce
rders are eampecuted in order of time
receied and the buysell price
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
23
Trading and settlement role
(cont)
bull $hares are traded using an electroniccomputerbased0 trading system7$tock ampchange utomated rading
$ystem $$0 cont0 $$ has improed the speed andeciency of tradeprocessing andsettlement+ and the dissemination ofinformation to market participants
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Trading and settlement role
(cont)
bull $ $$ learing ouse lectronic$ubregister $ystem0 $hare o-nership and settlement
performed electronically
$ettlement of transactions -ithin threedaysT 0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2amp
Trading and settlement role
(cont)
bull DI $$ Depositary Interest0 lectronic depositary receipts issued by
the $ representing uncerticatedscriptless0 securities
Ult$ $$ Unit ltoreign $ecurities0 for equitysecurities
DI Depositary Interest0 for debt securities
ercomes problems of countries not
recognising uncerticated holdings or theelectronic transfer of legal title
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Information role
bull Inestor condence in the ustralian$tock ampchange $0 relies oninformational eciency
ie the current share prices should reectall information aailable in the market
bull he $ has a critical role infacilitating the o- of information to
the market
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2(
Information role (cont)
bull gtisting rules are $ rules -ith -hich alisted entity must comply
bull ampamples of information disclosures
required by $ listing rules change in forecasted protability
ppointment of a liquidator
Declaration of a diidend
otice of a takeoer bid
Disclosure of directors5 interests
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2)
Regulatory role
bull he aim of regulation is to ensuremarket participants hae condencein the integrity of market operations
bull -o main superisors in ustralia ustralian $tock ampchange $0
ustralian $ecurities and Inestmentommission $I0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 2939
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
2
Regulatory role (cont)
bull $ nsures listed companies meet specied
limited leels of performance andstandards of information disclosure so
inestors can make informed decisions ontinuous disclosure
rescribes appropriate behaiour of brokerparticipants on the eampchange
enalties include discipline+ penalties+ loss oflicence
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3039
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
30
Regulatory role (cont)
bull $ cont0 lectronic sureillance systems to monitor
trading behaiour of market participants Detect trades that fall outside certain limits
rossreferences all trades against informationon the releant company+ directors andassociated parties
he ational 8uarantee ltund lt80
compensates inestors in the eent ofmisconduct by a stockbroker
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3139
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3$
Regulatory role (cont)
bull $I 9esponsible for the superision of
corporations la- and markets
stablished in 1AA1 as the $ ustralian$ecurities ommission0
ltollo-ing 6=allis Inquiry5 ndings+changed its name to $I
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3239
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
32
Regulatory role (cont)
bull $I cont0 9esponsible for market integrity and
consumer protection across the nancialsystem
ot solely conned to equity alsoinestments+ insurance andsuperannuation products0
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3339
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
33
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3439
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Marketsbull rigins of the modern share market
can be traced back to commercialactiity in ngland in the 1Bth century
and the corporate form of businessbull In ustralia+ share markets deeloped-ith gro-th in economic actiity incities and proincial locations and
operated quite independently
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3539
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3amp
44 The eve-opment o( Share
Markets $contbull In 1AC the ustralian ssociated
$tock ampchanges $0 -asincorporated -hich eentually
represented all siamp capital city $sbull In 1ACB a oint eampchange -as formedbet-een the $ydney and (elbourneeampchanges -hich allo-ed members
access to both trading oors
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3639
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3
44 The eve-opment o( Share
Markets $contbull 1AEC sa- the establishment of the
ustralian $tock ampchange $0 as amutual organisation and a single
national marketbull In 1AAE the $ -as demutualisedand became a publicly listedcorporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3739
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3(
Chapter rganisation
41 Introduction
42 he ature of the orporation
4 he $tock ampchange
44 he Deelopment of $hare (arkets
4) $ummary
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3839
Copyright
2003 McGraw-Hill Australia Pty LtdCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slides ta Financial Institutions Instruments and Markets e y Christopher ieySlides prepared y Athoy Stager
3)
4 Summary
bull he corporate form of organisation has a numberof adantages fund raising and management0and the disadantage of the separation ofo-nership and control
bull he $ has a number of market roles rimary and secondary
Deriatie
Interest rate
rading and settlement
Information
9egulatory
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
7172019 ppt_ch04ppt
httpslidepdfcomreaderfullpptch04ppt 3939
C i h
2003 M G Hill A li P L dCopyright983209 2003 McGraw-Hill Australia Pty Ltd
PPT Slid t Fi i l I tit ti I t t d M k t Ch i t h i 3
4 Summary $cont
bull he ustralian share market is regulated by the$ and $I
bull he $ has demutualised and is no- a publiclylisted corporation
