Professional Documents
Culture Documents
Primary
New issue
Key factor: issuer receives the proceeds from
the sale
Secondary
Existing owner sells to another party
Issuing firm doesnt receive proceeds and is not
directly involved
2015 McGraw-Hill Ryerson Limited
3-3
Investment Banking Arrangements
Figure 3.1Relationship between a firm issuing securities, the underwriters, and the public
Direct search
Brokered
Dealer
Auction
Dealer markets
Electronic communication networks (ECNs)
Specialist markets
Spreads and tick size on NYSE
Nasdaq (3 levels)
Organized Exchanges
New York Stock Exchange (NYSE Euronext)
American Stock Exchange (NYSE Amex)
Electronic Communication Networks (ECNs)
NYSE Arca, BATS, Direct Edge
Initial margin
Minimum margin
Minimum level the equity margin can be
Currently 30%
Set by the securities commissions
Margin call
Call from the broker for more equity funds
X Corp $70
50% Initial Margin
30% Minimum Margin
1000 Shares Purchased
Initial Position
Stock $70,000 Borrowed $35,000
Equity $35,000
2015 McGraw-Hill Ryerson Limited
3-29
Margin Trading - Minimum Margin
New Position
Stock $60,000 Borrowed $35,000
Equity $25,000