tailieunhanh - Investment Securities and End-User Activities

Investors in quoted companies come in all shapes and sizes with a multiplicity of requirements, risk tolerances, investment styles and processes. Indeed no two investors are the same and may actually approach the purchase of a company’s shares from equal and opposite directions. It is fortunate that this is the case as it takes buyers and sellers to make a market. From an investor relations perspective, it is therefore important that quoted companies know their investors. At the most basic level it is worth knowing whether an investor is seeking income or capital returns or a combination of both. An idea. | Section Investment Securities and End-User Activities A depository institution s investment and enduser activities involve the use of securities both available-for-sale and held-to-maturity and derivative contracts to achieve earnings and risk-management objectives that involve longer time horizons than those typically associated with trading These nontrading activities involve the full array of cash securities money market instruments and derivative contracts. Cash securities include fixed- and floating-rate notes and bonds structured notes mortgage pass-through and other asset-backed securities and mortgage-derivative products. OBS derivative contracts include swaps futures and options. When institutions acquire and manage securities and derivative instruments they must ensure that these activities are permissible and appropriate within the established limitations and restrictions on banks holdings. Institutions must also employ sound risk-management practices consistently across these varying product categories regardless of their legal characteristics or nomenclature. This section provides examiners with guidance on the permissibility and appropriateness of securities holdings by state member banks sound risk-management practices and internal controls used by banking institutions in their investment and end-user activities interaffiliate derivatives transactions securities and derivatives acquired by the bank s international division and overseas branches for its own account as well as on the bank s foreign equity investments that are held either directly or through Edge Act corporations and unsuitable investment practices. LIMITATIONS AND RESTRICTIONS ON SECURITIES HOLDINGS Many states extend the same investment authorities available to national banks to their chartered banks often with direct reference. In turn the 1. In general terms derivatives are financial contracts whose value derives from the value of one or more underlying assets .