The Capital Markets: Evolution of the Financial Ecosystem

The Definitive Guide to Capital Markets Today and Tomorrow

The Capital Markets breaks new ground with its peerless coverage of the evolution of the financial ecosystem, with a keen focus on the myriad changes since the Great Recession of 2007 to 2009.

Developed by industry experts from long–standing financial institutions, this comprehensive and accessible guidebook sheds fresh light on the state of global capital markets. It focuses on the evolutionary shifts forming new realities and operating procedures, from the different roles banks are playing to the unintended consequences of regulation. This single resource gives you:

A–to–Z coverage of capital markets conveniently organized for quick reference A complete course for getting up to speed with state–of–the–art theory and practice Multiple perspectives from hand–picked contributing experts on their disciplines

This book provides the reader with a new roadmap to navigate the capital markets.

Preface xi

Acknowledgments xiii

About the Author & Executive Editor xv

About the Contributors xvii

PART ONE Introduction and Tools

CHAPTER 1 The Early 21st–Century Evolution of Global Capital Markets 3
Jack Malvey

CHAPTER 2 The Role of Global Capital Markets 20
Christian A. Edelmann and Shasheen Jayaweera

CHAPTER 3 How the Global Financial Crisis Transformed the Industry 52
Christian A. Edelmann and Pete Clarke

CHAPTER 4 Cash Bonds and Futures 64
Amir Sadr

CHAPTER 5 Risk in Capital Markets 89
Peter Reynolds and Mike Hepinstall

CHAPTER 6 Enablers for Robust Risk Management in Capital Markets 110
Swati Sawjiany

CHAPTER 7 Making Markets Work 120
Eric Czervionke

PART TWO Capital Markets Products

CHAPTER 8 Money Markets 157
Randy Harrison and Paul Mandel

CHAPTER 9 Repurchase Agreements 184
Karl Schultz and Jeffrey Bockian

CHAPTER 10 U.S. Treasury and Government Agency Securities 205
Lee Griffin and David Isaac

CHAPTER 11 Government–Sponsored Enterprises and Federal Agencies 210
David Isaac and Francis C. Reed, Jr.

CHAPTER 12 Inflation–Linked Bonds 232
Henry Willmore

CHAPTER 13 Mortgage–Backed Securities 239
Patrick Byrne

CHAPTER 14 Corporate Bonds 254
Marvin Loh

CHAPTER 15 Preferred Stock 286
Sarah Swammy

CHAPTER 16 Distressed Debt Securities 296
Michael McMaster

CHAPTER 17 Securitization 304
Daniel I. Castro, Jr.

CHAPTER 18 Asset–Backed Securities 312
Daniel I. Castro, Jr.

CHAPTER 19 Non–Agency Residential Mortgage–Backed Securities (RMBSs) 329
Daniel I. Castro, Jr.

CHAPTER 20 Commercial Mortgage–Backed Securities (CMBSs) 348
Daniel I. Castro, Jr.

CHAPTER 21 Collateralized Debt Obligations (CDOs) 361
Daniel I. Castro, Jr.

CHAPTER 22 Structured Investment Vehicles (SIVs) 381
Daniel I. Castro, Jr.

CHAPTER 23 Collateralized Loan Obligations (CLOs) 389
Mendel Starkman

CHAPTER 24 Municipal Bonds 419
Fred Yosca

CHAPTER 25 Equities 435
David Weisberger

CHAPTER 26 Cash Equities in the Secondary Market 458
Eric Blackman and Robert Grohskopf

CHAPTER 27 Exchange–Traded Funds (ETFs) 469
Reginald M. Browne

CHAPTER 28 Equity Capital Markets 481
Daniel C. de Menocal, Jr.

CHAPTER 29 Interest Rate Swaps 503
Amir Sadr

CHAPTER 30 Interest Rate Options 523
Amir Sadr

CHAPTER 31 Commodities 548
Bob Swarup

CHAPTER 32 Currency 571
Simon Derrick

CHAPTER 33 Conclusion 578
Gary Strumeyer and Christian Edelmann

Index 591

GARY M. STRUMEYER is the former president of BNY Mellon Capital Markets, LLC. He is the author of Investing in Fixed Income Securities and Keys to Investing in Municipal Bonds. Gary is a former adjunct professor at NYU′s School of Professional Studies.

SARAH SWAMMY is a managing director, business manager, and head of supervision for BNY Mellon Capital Markets. She is a member of BNY Mellon Capital Markets Board of Managers and serves as a member of New York Institute of Technology School of Management′s executive council. Sarah is an adjunct instructor at NYU′s School of Professional Studies.