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Main activities of commercial and investment banks in the capital markets - Essay Example

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Undergraduate
Essay
Finance & Accounting
Pages 5 (1255 words)

Summary

Commercial banks provide capital market related services, depository services, advises on portfolio management or investment counseling, etc. Many banks have now started offering investment services to the retail customer, which is essentially advice and execution of mutual fund investments and redemptions…

Extract of sample
Main activities of commercial and investment banks in the capital markets

Commercial banks provide capital market related services, depository services, advises on portfolio management or investment counseling, etc. Many banks have now started offering investment services to the retail customer, which is essentially advice and execution of mutual fund investments and redemptions.The Commercial Banks can be referred to as institutions that are involved in credit activities. Credit activities can be classified into deposit acceptance and borrowing funds from other banking institutions. Other activities are credit extension, risk management and risk advice.The classification of the types of services that are offered by a commercial bank is as follows:• Discretionary Services – Decisions are taken on behalf of the clients/customers by a portfolio manager keeping in view the different parameters of asset allocation.
• Non-discretionary Services – In this kind of services, portfolio managers do not have the right to take decisions on behalf of clients/customers. The client or the customer is needed to authorize all the transactions happening with respect to their account.Advisory services – Flexible, unbiased investment advice customized to meet the client’s needs.Transaction support – All transactions, both in the primary and secondary markets facilitated through a panel of brokers.Custodial services – Important from the point of view of removal of settlement hassles and efficient follow-up of all corporate actions.Commercial banks approach the brokers for information about the quotes of other commercial banks.

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