Introduction

Readers of this book will, no doubt, have different backgrounds and varying levels of understanding of global financial markets. The first part of this chapter, therefore, is intended primarily for readers who are new to the world of financial markets. It explores these markets through the lens of different products and services offered in them, the different types of financial institutions that deliver such products and services, and the types of markets in which they are delivered. The chapter then examines the securities trading function within a financial institution to illustrate how records relate to the activities and processes undertaken by such institutions. This type of ‘business systems analysis’ is typical of the work required to build records management tools such as business classif ication schemes and retention schedules. Inevitably, this chapter introduces many technical terms, but wherever possible such terms are explained on first use.

Products and services

Financial markets exist to transfer capital efficiently from those who have it to those who want it for whatever purpose (e.g. for buying raw materials for production). They also transform capital from one form into another for the purposes of global trade (e.g. by exchanging one currency for another type of currency or by transforming debt to a tradable security through a process known as securitization). Financial services generally are divided into those offered to individuals – ‘retail’ financial services – and those offered to companies or governments. One example of a f inancial service to companies is corporate finance, the activity of raising capital for companies to use, generally in the most tax-efficient manner.

Financial services are achieved through different types of financial instruments or products. Wire transfers, for example, allow global transfers of payments between parties involved in financial transactions. A syndicated loan is a financial product in which a financial institution will structure a special loan for a client when the magnitude of the loan, or its complexity, is beyond the institution's own credit policy or risk tolerance. In such cases, the institution will act as an agent for a syndicate of banks who are willing to share risk participation, either pro rata or at different levels of risk.