Capital Markets: Main Actors in the Market Developed financial markets like the USA have evolved a range of financial institutions. They keep changing and innovating, while also introducing completely new institutions. The BiH financial market is relatively under-developed and includes only certain basic types of financial institution. The main participants in the BiH capital market are: The Securities Commission; The Securities Register; The investment funds (IFs); The fund management companies (DUFs); The brokerage houses; The depository banks; The custodian banks; Brokers and investment advisors. Investment funds are financial institutions that issue securities to raise capital and invest in other companies. Under the FBiH and RS Acts on Funds, they also include any legal entity, company, or several property where, regardless of the legal form, participation is offered on the basis of shares or similar security with the aim of collecting deposits in cash and the express purpose of investing over 60% of these investments in a securities portfolio, money deposits, or other assets, so that investors do not supervise decisions on investment on a day to day basis and the basic aim is to secure a return on investment for investors, whether in profit or other form of benefit. In practice, these funds are organized as open-ended or closed investment funds. The key point about open-ended investment funds is that monies can be paid in or withdrawn at will. This mechanism involves changeable capital, e.g. when investors deposit monies, the fund capital (assets) increases, and vice versa, when they withdraw their monies, fund assets decrease. Closed investment funds have fixed capital deposited in the course of formation, i.e. establishment. This fixed capital does not change during the closed investment fund operations. A fund management company is a legal entity established as a limited-liability company or joint-stock company, whose activities include establishing and managing investment funds, i.e. investing funds for themselves and for the holders of share in open or closed investment funds, as well as other tasks set out in the law. Brokering houses (brokerages) are legal entities licensed to perform brokerage tasks. These tasks include selling and buying securities for oneself or a client for a fee. Depositary banks are institutions that perform the tasks of issuing securities and monetary transactions related to trading securities on the stock exchange or other regulated public market. Custodian banks are institutions that provide the services of safekeeping securities, settling transactions, collecting revenues, representing clients, reporting on transactions, buying and safekeeping foreign treasury or corporate bonds, and providing information on local capital markets, etc. Custodial services are generally used by investment funds, insurance companies, banks, brokerages, and major companies. Brokers are individuals who have passed the professional brokerage exam and have a license to perform brokering tasks. A broker is an authorized intermediary in securities trading acting in his own name for a client (commission agent) or in the client's name (agent). They mediate between the investor (buyer of goods or securities) and holder-owner (i.e. of goods or securities). Brokers charge a fee for their services, which is paid upon closing a transaction. Brokers are often confused with dealers, who perform the tasks of buying and selling securities for themselves in order to benefit from the price differential. Investment advisors are individuals who have passed the professional exam for investment advisors. They perform provide advisory services to clients related to securities trading, investment in securities, and other securities-related transactions aimed at diversification and risk minimization or profit maximization. Other important actors on the capital markets include the Securities Commission and the Securities Register, for which see above.
