Activity and Structure of Financial Intermediaries

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There are various financial intermediaries within the financial industry. Some intermediaries largely offer depository or savings services while others offer services focusing on insurance and financial securities. Despite the differences in services offered, all of these intermediaries act as middlemen, bridging the gap between savers/lenders and borrowers (Adrian & Shin, 2011; Bodie, Kane, & Marcus, 2011). This paper will discuss the commonalities and differences between the operating activities of securities firms and depository institutions. Additionally, the balance sheet structure of securities firms will be evaluated in comparison to those of other financial intermediaries. Finally, the different major regulatory organizations concerned with daily operations in the securities industry will be analyzed and evaluated to assess their position in the effective running of market operations.

The operating activities of depository institutions and securities firms have some similarities and differences. For one, both depository institutions and securities firms act as intermediaries as they provide retail services to their customers (Saunders & Cornett, 2011). For example, commercial banks mostly make loans for consumers and real estate while savings institutions typically specialize in residential mortgages (Saunders & Cornett, 2011). Similarly, securities firms focus on retail services such as “the purchase, sale, and brokerage of existing securities” (Saunders & Cornett, 2011, p. 104).
In contrast, depository institutions are able to accept deposits from their customers to make various types of loans while securities firms are non-depository institutions that are paid fees to perform services for customers (Saunders &...

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U.S. Securities and Exchange Commission (SEC). (n.d.). The investor's advocate: How the SEC protects investors, maintains market integrity, and facilitates capital formation. Retrieved December 1, 2013, from

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