MM CHAPTER 1_1

MM CHAPTER 1_1

1. DEFINITION

   • S-T FUNDING NEED
     • HOUSEHOLDS
       • TRADE CLAIMS & ASSETS (NOT MONEY)
     • BUSINESS
     • GOV
     • SURPLUS FUNDS
       • GOV
       • HOUSEHOLDS
         • TRADE CLAIMS & ASSETS (NOT MONEY)
       • BUSINESS
   • < 12 MONTHS
   • PROCESS
     • INDIRECT FINANCING
       • FINANCIAL INTERMEDIARY
     • DIRECT FINANCING
   • INVOLVES INTEREST
   • TYPES
     • WHOLESALE
       • LARGE
         • BANKS
           • CORPORATE BANKING
             • LARGE LISTED FIRMS
           • BUSINESS BANKING
             • SMALLER FIRMS (MAY/MAY NOT BE LISTED)
           • RETAIL BANKING
           • PRIVATE BANKING
             • HIGH NET WORTH
         • LARGE CORPORATES
         • PARASTATALS
         • INSURERS
         • PENSION FUNDS
         • ASSET MANAGERS
     • RETAIL
       • NOT TRADABLE
         • PERSONAL LOANS
         • BANK DEPOSITS

2. PURPOSE

   • CORPORATES & BANKS
     • S-T FINANCE
       • MANUF INPUTS
       • IM/EXPORTS
       • MAINTENANCE PROJECTS
     • ATTRACTING DEPOSITS (BANKS)
   • CASH MAN
     • EXCESS $$$
       • INVEST
   • GOV FINANCE
     • S-T PROJECTS FINANCE
   • MONETARY POLICY
     • MANAGE LIQUIDITY
       • CASH RESERVES
   • FINANCIAL SECTOR REG
     • KEY REFORMS
       • S-T RESILIENCE OF LIQUIDITY RISK PROFILE OF FIN. FIRMS
         • CONSEQUENCE OF 07/08 CRISIS
         • BASEL 3
           • STABLE FUNDING RATIO (SFR)
           • LIQUIDITY COVERAGE RATION (LCR)
   • PRICE DISCOVERY
     • i CALCULATED
       • ISSUER: CREDIT RISK
       • INSTRUMENT: LIQUIDITY
         • DEMAND/SUPPLY
       • EFFICIENT PRICE DISCOVERY PROCESS
         • MM INSTRUMENTS
           • DERIVATIVES

3. PARTICIPANTS

   • BANKS
     • NB ROLE
       • CUSTODIANS OF PUBLIC'S $
     • ISSUE & TRADE
     • FIN. INTERMED.
     • CENTRAL BANK INTERVENES MAINLY THRU BANKS
   • LARGE BORROWERS
     • COMMERCIAL BANKS
     • LAND BANK
       • PROMISSORY NOTES
       • BILLS
     • NON-FIN CO
       • FRNs
       • CAPITAL PROJ BILLS
       • CALL BONDS
   • SARB
     • CORP. OF PUBLIC DEPOSITS (CPD) (subsidiary of SARB)
       • INVESTS SURPLUS PUBLIC SECTOR FUNDS
     • SIG AFFECTS MM ENVIRON
       • FURNISH ACCOMODATION TO BANKS
       • DEAL WITH BANK CASH SHORTAGES
   • LESS NB
     • PIC
     • L-T INS
     • PENSION FUNDS
     • PARASTATALS
       • ESKOM
       • TRANSNET
     • OFFSHORE INVESTORS
   • BORROWERS
     • ULTIMTE BORROWERS
       • GOV
         • CENTRAL GOV
           • T-BILLS
         • PUBLIC CORPORATES/PARASTALS
           • COMMERCIAL PAPER BILLS
         • LOCAL AUTHORITIES
       • CORPORATES
       • ISSUES PRIMARY SECURITIES
         • NOT THE SAME AS PRIMARY MARKET
       • USUALLY APPROPROACH FIN INT. TO GET FUNDING
         • BUT CAN SELL S-T COMM PAPER DIRECTLY TO INVESTORS
     • FIN INTERMEDIARIES
       • ISSUES INDIRECT SECURITIES
       • DEPOSIT INT.
         • SARB
           • ISSUES DEBENTURES
             • FOR MONETARY POLICY
               • NOT FOR FUNDING PURPOSES
         • LAND BANK
         • BANKS
         • POSTBANK
       • NON-DEPOSIT INT.
         • INSURERS
         • PENSION FUNDS
         • DEVELOPMENT BANK
         • PIC
         • UNIT TRUSTS
   • LENDERS
     • ULTIMATE LENDERS
       • CORPORATES!
         • MINING HOUSES!
     • FIN. INTERMEDIARES
       • DEPOSIT INT.
         • BANKS
           • INVESTS IN NEG. CERT. OF DEPOSITS
         • CORPORATION FOR PUBLIC DEPOSITS
           • INVESTS IN T-BILLS
         • SARB
           • INVESTS IN 2NDARY MARKET
             • VIA BANKS
               • UNDER REPO SYSTEMS
             • TO PROVIDE LIQUIDITY
               • NOT FOR RETURNS
       • NON-DEPOSIT INT.
         • PENSION FUNDS
         • PIC
         • UNIT TRUSTS
         • QUASI FIN. INTERMEDIARIES (QFIS)
           • BORDER ON BEING CLASSIFIED AS NON-DEPOSIT INT.
           • INV. TRUSTS
           • PRIVATE EQUITY FUNDS
           • SECURITISATION VEHICLES
           • CREDIT COOPERATIVES
           • FRIENDLY SOCIETIES
           • MICROLENDERS
           • BUYING ASSOCIATIONS
           • STOKVELS
   • BROKERS
     • CHARGE COMMISSION
       • BUYING/SELLING SECURITIES
         • FOR ANOTHER FIRM/PERSON
       • BANKS
   • DEALERS
     • BUYS/SELLS SECURITY FOR ITS OWN ACCOUNT
       • OPPOSITE OF BROKER
       • BANKS
       • ACT AS PRINCIPAL IN A TRANSACTION
         • MARKET MAKERS
         • JOBBER
           • V S-T SPECULATIVE DEALERS