The New Issue Market

A) Read the text below quickly and name organizations involved in the issues.

b) Reread the text more carefully to find the answer to the question:

What can guarantee the success of the issue?

The mere buying of securites traded on the Stock Exchange does not create new capital. The stock exchange does not itself issue new shares to the public. Fresh capital is provided through the mechanism known as the New Issue Market.

The Market has no outward fqnnal organization or fixed place of business. Nevertheless it functions efficiently on the basis of a number of institutions working together: issuing houses, joint-stock banks, merchant bankers, insurance companies, stockbrokers, underwriters and others.

Issuing houses have become very active in the New Issue Market recently. An issuing house is a financial firm specializing in the issuing or floating of new securities for governments, municipalities and companies. Although this activity is not directly connected with the Stock Exchange, the Exchange is vitally interested in the activities of issuing houses; and the people who own and operate issuing houses have often been members of stock exchanges. The issuing house undertakes that the whole of a new issue of securities should be sold and makes all necessary arrangements for it.

It is charged with the entire "handling" procedure of the issue: this includes the arrangements for banks, other financial houses to share in the underwriting (only in a few cases do issuing houses underwrite the entire amount themselves); arrangements for the drawing up and publication of the prospectus.

Yet, even the most careful and competent handling will not guarantee the success of an issue. This depends on the attitude of the investing public, who will be guided very much by the reputation of the issuing house itself.

Issuing houses make arrangements with underwriters, who guarantee, for a commission, that if the public does not subscibe fully to the new issue the underwriters take up the remaining shares of the stock.

Underwriting is a process whereby a group of investment bankers agree to purchase a new security issue at a set price and offer it for sale to the general public.

Words you may need:

new issue market – ринок нових емісій

mere – простий

outward – зовнішній

issuing house – емісійний дім

underwriter – гарант розміщення цінних паперів

floating – випуск (акцій через біржу)

"handling" procedure – виконання всіх формальностей

žTESTS

I. Choose the correct answer:

1. The principal stock exchange in the United Sates of America is known as:

a) the NYSE;

b) Wall Street

2. Ready marketability requires that new issues should be made or backed by:

a) reputable borrowers or institutions;

b) law and financial intermediaries or institutions.

3. Jobbers:

a) act as agents for the public;

b) deal only with brokers and not with the general public.

4. Share indices indicate:

a) percentage changes in the market value of shares as compared with their value in the base years of the index;

b) percentage changes in share prices within the last three years.

5. The financial group of equities is broken down into:

a) capital goods, consumer goods, industry;

b) sectors, e.g. banks, discount houses etc.

II.Match what statements are true and what are false. Results write to the table:

1.The London Stock Exchange has the highest volume of trading in the world.

2.Women were allowed to deal on the Stock Exchange for the first time in 1973.

3.The London Bears and Bulls is a club for members of the Stock Exchange.

4.The Yakuza are a small group of brokers who operate in Kyoto.

5.Manhattan Island was once traded for beads.

6.The first members of the London Stock Exchange were evicted from their premises for bad behavior.

Table

True
False

III.Fill the tables:

a)

b) Characterize the following period by the processes which had place there:

17^th – 18^th centuries
19^th century
The beginning of the 20^th century
1980s

ì Unit 9

Дата добавления: 2014-11-29