Introduction to the business of Investment Banking - Assignment Example

Introduction to the business of Investment Banking Contents Contents 2 Historical Background 3 Structure and Operation 3 Products and Market 4 Roleof investment banks in capital market activities 4Historical BackgroundTadawul is the only stock exchange of Saudi Arabia. The exchange came into being in 19 March 2007. The setting up of the company was conducted in accordance with the Capital Markets Law of Saudi Arabia. Most of the companies which are based in the country are being listed in this stock exchange.

The country experienced a rise in the number of joint stock companies in the year 1975 due to the improvement in the economic prospects of the country. This facilitated the need for setting up an institutional structure that would ensure that the buying and selling of the shares of the companies take place in a formal manner. An ardent need was felt for having a regulator which would ensure that the trading takes place keeping the interest of the investor in the mind. Hence in 1984, a ministerial committee was formed with the sole motive of regulating the capital market of Saudi Arabia (Tadawul, 2014, p. 1). Structure and OperationThe Saudi Arabian Stock Exchange is mainly run by the Board of Saudi Arabia which includes 9 members.

The Capital Market Authority of the country takes care of the recommendation through which the members of the Board are nominated. The board comprises of the Chairman as well as the Vice Chairman apart from 7 other members. The operations of Tadawul are conducted in the electronic mode. Most of the orders of buy and sell as well as the ordering system or the trading procedure take place with the help of the electronic modes. This was started since 1990 and ensures that there is very little scope for fraudulent activities or illegal trading practices in Saudi Arabian Stock Exchange.

The trading session of the exchange takes place between 11 am in the morning and 3.30 pm in the afternoon. Products and MarketThe Tadawul All Share Index or the TASI is the index which indicates the performance of the stocks which are listed in the Tadawul Stock Exchange. The stocks of more than 168 companies are traded in the stock exchange. There are a number of sectors under which he stocks are traded. These sectors include the financial, consumer goods, Healthcare, telecoms, oil and gas as well as the industrial goods and materials.

The products that are mainly traded in the Tadawul Stock Exchange include the Equities, Sukuk and Bonds, Mutual Funds as well as Exchange Traded Funds. Role of investment banks in capital market activitiesThe investment banks have a very active role in the entire process of the listing of the shares as well as in the raising of the funds from individual investors as well as the corporate clients when a company goes public. The investment bank ensures that the interests of the investors are protected in the proper manner and there is transparency in the listing process of the new companies in the Tadawul stock exchange (Tadawul, 2013, pp. 59-63). The investment bankers also act as underwriters in the process of the listing of the shares along with providing the services of research, management of the IPO or the broking activities.

The commissions that the investment bankers get for providing these services comprise of the revenue of the investment bankers. ReferencesTadawul, 2013. Peridical Publication 2013. [pdf] Available at http://www.tadawul.com.sa/static/pages/en/Publication/PDF/Tadawul_Magazine_84.pdf [Accessed on 21 Jan 2014]Tadawul, 2014. About us. [online] Available at http://www.tadawul.com.sa/wps/portal/!ut/p/c1/04_SB8K8xLLM9MSSzPy8xBz9CP0os3g_A-ewIE8TIwODYFMDA08Tn7AQZx93YwN3I_3g1Dz9gmxHRQB7GACB/ [Accessed on 21 Jan 2014]