Structure and Role of Structure and Role of Financial MarketFinancial Market

Learning points of this lessonLearning points of this lesson

Describe the roles of different participants in the financial market.

Class activity (5 mins) • Identify any three participants in the financial

market on the contract notes and state their roles in the market.

Participants in the Financial Market

A real contract notes of the teacher (covering the address)

Retail investors are individual investors

• To provide capital for the financial market and listed companies

• Two types of investors: retail investors and institutional investors

Institutional investors are organisations the hold a large amount of capital

Participants in the Financial MarketInvestors

An real contract notes of the teacher (covering the address)

Part of the contract notes showing your name

My photo

• The securities of listed companies are traded on a stock exchange

• The capital raising activities of listed companies can improve the image of the financial market

• If the listed companies can maintain good corporate governance, the investors’ confidence can be raised

Participants in the Financial MarketListed Companies

Replaced with the company shown on your contract notes

• Stock brokers have to obtain a license issued by the Securities and Futures Commission before they executive trades of any securities for their clients

• Stock brokers act as an agent which are responsible for managing the transactions between the buyers and sellers

Participants in the Financial MarketStock Brokers Replaced with the

broker’s name shown on your contract notes

• E.g. securities companies, bank

To receive trading orders from clients

To input the order for sale and purchase of securities into the computer-trading system of HKEx

To notify clients that the transactions have been completed

• The roles of stock brokers are:

Participants in the Financial MarketStock Brokers

• To regulate and supervise the operations of the financial market

• To protect people who invest in financial products

• To set standards for authorisation of financial products and licensing standards for intermediaries

Participants in the Financial MarketRegulators Replaced

with that part shown on

your contract notes

• To set and enforce market regulations

• To educate the public about the financial market of Hong Kong

Participants in the Financial MarketRegulators

HKEx defends `secret' decision 07/08/2012 Hong Kong Exchange and Clearing (0388) yesterday defended its decision to allow China High Precision Automation中國高精密 (0591) to resume trading. The mainland firm had earlier hidden part of its operation from auditors, citing "national security" concerns.http://finance.thestandard.com.hk/en/business_news_view.asp?aid=125097

Replaced with more updated news relating to SFC

• To license and supervise intermediaries seeking to conduct regulated activities

• To supervise market operators

Participants in the Financial Market

Replaced with that part shown on your contract notes

• HKEx is the frontline regulator of issuers listed in Hong Kong.

Regulators

• It strictly enforces its listing, trading and clearing house rules in order to maintain open, fair, transparent and efficient markets in accordance with international standards and best practices Kong.

Conclusion•Participants in financial market• _______________

• _________ companies

• Share .

• Stock .

• Regulators

- _____________________

- _____________________

• Bank

Conclusion•Participants in financial market

• Investors

• Listed companies

• Stock brokers

• Regulators

- Securities and Futures Commission

- Hong Kong Exchanges and Clearing Limited

• Bank

Test your learning

1)In Hong Kong, retail investors can trade listed securities on the stock exchange by themselves.

True/False

Test your learning

1)In Hong Kong, retail investors can trade listed securities on the stock exchange by themselves.

True/False

Retails investor need to trade securities on HKEx through Stock brokers (E.g. securities company, bank)