What is Investment Banking?
Investment banking is a category of financial services that specializes primarily in selling securities and capital. Investment banking is different from commercial banking, which specializes in and commercial loans.
How Does Investment Banking Work?
Investment banking plays a crucial role as mediator between companies that portfolio management. 'Sell' side activities include new lines of , marketing financial products and publishing financial research.securities and the individuals or entities wishing to purchase them. In this respect, investment banking operates along two main lines: a 'buy' side and a 'sell' side. 'Buy' side operations include services such as securities trading and
To illustrate the “stock can place an order and deliver these shares.” of investment banking, suppose an investor wants to purchase 100 of company XYZ. They can solicit the services of an , where a
To illustrate the “initial public offering (IPO). XYZ can solicit an investment bank to underwrite the shares, and sell them to their clients. This way, the investment bank raises the that company XYZ hopes to gain from the issue of the new shares.” of investment banking, suppose company XYZ plans to issue new shares of stock in an
Regulation is a key issue in investment banking because it operates on both (and often competing) sides of the same coin. Consequently, there is significant room for conflicts of interest between the buying and selling operations. Agencies such as the SEC provide strict guidelines to help ensure that operations on the 'buy' and 'sell' sides do not intersect and result in unfair market practices or ethics violations.