The Sell-Side/Equity Analysts, Brokers and Corporate Access

In this chapter, we explore the role of investment banks. Inherently different to retail banking, investment banks only work with professional investors and companies. In general, an investment bank generates two sources of revenue defined as primary and secondary sources. Primary sources are fees collected related to corporate finance-led activities (based on advisory activities). A well-rounded corporate finance department typically operates within three segments: equity capital markets (ECM), debt capital markets (DCM) and mergers and acquisitions (M&A). It assists raising capital to companies from financial instruments such as issuing equity or bonds and provides advisory services. With a high level of sensitive information in their possession, investment banks are highly regulated. Therefore, an investment bank must have strict compliance procedures in place. In addition, the investment bank has various virtual barriers of information flow (known as “Chinese walls”) to block the exchange of information between departments, potentially resulting in conflicts of interest that could result in unethical or illegal business or other activities. This chapter provides a detailed overview of the internal relationships, collaborations and information flows within an investment bank.