Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 65

The word globalization indicates international integration of markets and economies, whereby they become interdependent and interconnected. In today's world, large corporations obtain financing from major money centers around the world in many different currencies to finance their global operations. The major money markets in the world include New York, London, Singapore, and Tokyo. The global nature of operations also forces many corporate treasurers to establish international banking relationships and place short-term funds in several different currencies. The effective management of foreign exchange risk is therefore an integral part of the duties of a modern treasury department. Individual investors too have started investing in the securities of many different countries to take advantage of the better performance potential from internationally diversified portfolios of financial assets.

The integration of financial markets around the world is due to four major factors.

Many countries have deregulated their money and capital markets substantially. The developed and some of the developing countries allow foreign brokerage firms to operate in their domestic stock exchanges to facilitate greater competition. The majority of countries have eliminated the structure of fixed brokerage commissions which used to exist. Commissions are now largely negotiable between the brokers and the clients and very often are a function of the trading volume and the quality of service that is sought. Interest rate ceilings have been largely removed, and offshore banking facilities (international banking facilities, or IBFs, in the United States) are available.

IBFs allow US banks to use domestic branches to service foreign customers with international transactions, both deposit and loan services, free of reserve requirements and interest rate regulations. Other countries have followed suit. The objective was obviously to make US banks competitive with respect to players outside the United States who were accepting deposits denominated in dollars and making loans in dollars.

Many countries have also sought to do away with the distinction between Commercial Banking and Investment Banking, and thus move toward Universal Banking. Most major banks these days are giant financial conglomerates that serve as one-stop financial solutions providers.