Investment Banking | Investment Banking Basics Everyone Should Know

An adviser must be a licensed broker-dealer to provide investment banking services. The adviser is subject to Securities and Exchange Commission regulation, and the institution may work on both the "sell side" and "buy side" of investment instruments.

The most traditional role for investment banks is, believe it or not, known as investment banking. This is the side of the organization that is primarily involved in helping companies raise funds and giving advice on mergers and acquisitions.

The less traditional role is selling and trading of investment vehicles. Traders buy and sell financial instruments to make money on those sales. The sales force of investment banks will call on institutions and high net worth individuals to recommend trading ideas. The buy-sell wishes of a client is communicated to the trading desks where trades are made or where new products to meet a client's need may be created. Trades can also be more speculative and not specific to a client or client wishes.

Research is an important function of investment banks where companies are analyzed and buy-sell recommendations about those companies' financial instruments are made.

Other functions they may be involved in:
Global transactions
Investment management
Merchant banking
Commercial banking.

Global investment banking is now a very large business with recent gains as high as 22% a year. The United States remains the primary source of investment banking income, although the sub-prime crisis resulted in large losses for some banks.

Today, investment banks are largely vertically integrated, and the financial crisis of 2008 also pushed investment banks into converting to bank holding companies to make them eligible for emergency government assistance.
As the financial crisis continues to evolved, so may the form and substance of investment banking worldwide, making what an investment bank might look like in five or ten years unpredictable.

Author Bio:
FBT Investments offers investment banking for local New Orleans and Gulf Coast area businesses and institutions. They also offer venture capital, private placement, film tax credits and a host of other business finance related services.