CISI CHAPTER 1:
THE FINANCIAL
SERVICES
SECTOR
What does the financial services sector do? - Answers -Provides the link between
organisations needing capital and those with capital available for investment
What is the Global Financial Centres Index? - Answers -Produced by z/Yen and
evaluates the rankings and future competitiveness of 111 major financial centres
What are the 5 areas of competitiveness? - Answers -Business environment, human
capital, infrastructure, financial sector development and reputation
What are the 2 key areas in financial services? - Answers -Wholesale (professional/
institutional) and retail
What activities take place in wholesale? - Answers -Equity markets, bond markets,
foreign exchange, derivatives, insurance markets (also fund management, UB and
custodian banking)
What is custodian banking? - Answers -Provision of services to asset managers
What activities take place in retail? - Answers -Retail banking, insurance, pensions,
investment services and financial planning/advice
What does World Federation of Exchanges do? - Answers -Provides data from the
global stock exchanges
What is global market capitalisation? - Answers -Total value of shares quoted through
the world's stock exchanges
, What are 'names'? - Answers -A small number of individual members who are liable to
the full extent of their private wealth
Are corporations fully liable? - Answers -No- limited liability
How do names work? - Answers -They join together in syndicates and each syndicate
will write insurance. There are many syndicates and each name will belong to one or a
number of these.
What do retail banks do? - Answers -Provide services such as taking deposits from and
lending funds to retail customers- similar services to business customers
What are savings institutions? - Answers -Originally specialised in offering savings
products to retail customers but now tend to offer a similar range of services to those
offered by banks
AKA building societies
Jointly owned by the individuals who have deposited money or borrowed money from
them (mutual societies)
What is P2P lending? - Answers -P2P lending cuts out the banks to reduce borrowing
rates and savers get better interest rates
What is crowdfunding? - Answers -Practice of funding a project by raising small
amounts of money from a large number of people.
What are the forms of crowdfunding? - Answers -Donation, debt crowdfunding or equity
crowdfunding
What are IBs? - Answers -Provide advice and arrange finance for companies that want
to float on a stock market, raise additional finance through issuing shares or bonds,
carry out M&A or help those who want to invest in shares/bonds like pension fund and
asset managers
What are the typical divisions in IBs? - Answers -Corporate finance and advisory work,
banking, treasury dealing, investment management and securities trading
What are pension funds? - Answers -A way of making provisions for retirement through
large, long-term investments in shares, bonds and cash
How do insurance companies work? - Answers -Collect premiums for cover, and then
invest the premiums in shares and bonds so they are a huge player in the stock market.
They subsequently realise these investments to pay any claims that may arise on the
various policies.
What is fund management? - Answers -Professional management of investment
portfolios for institutions and private investors
THE FINANCIAL
SERVICES
SECTOR
What does the financial services sector do? - Answers -Provides the link between
organisations needing capital and those with capital available for investment
What is the Global Financial Centres Index? - Answers -Produced by z/Yen and
evaluates the rankings and future competitiveness of 111 major financial centres
What are the 5 areas of competitiveness? - Answers -Business environment, human
capital, infrastructure, financial sector development and reputation
What are the 2 key areas in financial services? - Answers -Wholesale (professional/
institutional) and retail
What activities take place in wholesale? - Answers -Equity markets, bond markets,
foreign exchange, derivatives, insurance markets (also fund management, UB and
custodian banking)
What is custodian banking? - Answers -Provision of services to asset managers
What activities take place in retail? - Answers -Retail banking, insurance, pensions,
investment services and financial planning/advice
What does World Federation of Exchanges do? - Answers -Provides data from the
global stock exchanges
What is global market capitalisation? - Answers -Total value of shares quoted through
the world's stock exchanges
, What are 'names'? - Answers -A small number of individual members who are liable to
the full extent of their private wealth
Are corporations fully liable? - Answers -No- limited liability
How do names work? - Answers -They join together in syndicates and each syndicate
will write insurance. There are many syndicates and each name will belong to one or a
number of these.
What do retail banks do? - Answers -Provide services such as taking deposits from and
lending funds to retail customers- similar services to business customers
What are savings institutions? - Answers -Originally specialised in offering savings
products to retail customers but now tend to offer a similar range of services to those
offered by banks
AKA building societies
Jointly owned by the individuals who have deposited money or borrowed money from
them (mutual societies)
What is P2P lending? - Answers -P2P lending cuts out the banks to reduce borrowing
rates and savers get better interest rates
What is crowdfunding? - Answers -Practice of funding a project by raising small
amounts of money from a large number of people.
What are the forms of crowdfunding? - Answers -Donation, debt crowdfunding or equity
crowdfunding
What are IBs? - Answers -Provide advice and arrange finance for companies that want
to float on a stock market, raise additional finance through issuing shares or bonds,
carry out M&A or help those who want to invest in shares/bonds like pension fund and
asset managers
What are the typical divisions in IBs? - Answers -Corporate finance and advisory work,
banking, treasury dealing, investment management and securities trading
What are pension funds? - Answers -A way of making provisions for retirement through
large, long-term investments in shares, bonds and cash
How do insurance companies work? - Answers -Collect premiums for cover, and then
invest the premiums in shares and bonds so they are a huge player in the stock market.
They subsequently realise these investments to pay any claims that may arise on the
various policies.
What is fund management? - Answers -Professional management of investment
portfolios for institutions and private investors
