The Risky Business of an Equity Capital Market

Equity capital markets are markets that exist between companies and financial institutions, where the financial institutions are in charge of raising equity capital for these companies. The functions carried on by companies in share market where the allotment of new share issues, the distribution of new shares and the overall marketing of new issues. These include private placements, initial offerings to the public, special warrants and stocks. As far as stocks are concerned, deal with derivative tools like stock options, futures and swaps are available through the market. The financial information available in it depends on the information provided by companies, pertaining to their current financial standings and future performances. Based on this information, people decide to invest in the shares and stocks of various companies. An equity capital markets team comprises of people from different investment banks. This team, or these teams, help companies by carrying out major market functions that include managing the marketing for these companies, and managing the distribution, formation and structure of these companies. Then there is the investment relations team that is responsible for scrutinize and predicting stock patterns. They are also liable for information related to fiduciary duty and other issues, like legal and organizational matters that can affect investors and shareholders. Investments in it are perceived to be the most risky form of investments. They comprise of large cap, mid cap and small cap companies. Financial information, pertaining to these companies, is made available to the public. Based on the risk appetite of investors and information available people they invest accordingly. Wealth management forms an integral part of equity capital markets. Wealth management services cater to providing advice on financial investments. The activities include financial management and planning, investment portfolio management or portfolio management, and an assortment of other financial activities. The functions offered by these management services are known as ‘private banking’ services. The investors in these markets are known as HNIs or High Net worth Investors. They are a group extremely wealthy people, who require these services to regulate and manage their wealth. Wealth managers are the ones who perform these services for their HNI clients. Wealth managers can be certified financial planners, MBAs who have specialized in the field of finance, or any certified and credible money manager. There are also private wealth management services. They involve the function of controlling, managing and planning of funds for wealthy clients that are beyond the scope of an HNI. A private wealth manager is assigned to the wealthiest clients of an investment company. These managers are usually a group highly experienced money managers. The clients are assigned to these kinds of money managers to facilitate better services and better product offerings.