Finance corporations meet the need for medium and long term capital when such funds are not easily or directly available from traditional sources such as the Stock Exchange or banks.
Venture Capital Companies offer medium term and long term equity financing for new and developing businesses when such funds are not readily available from banks and other traditional sources. The British Venture Capital Association has 103 full members, which make up over 99% of the industry.
Financial markets is a collection of sophisticated securities, futures and options the money market, the euro currency market, Lloyd’s insurance market, the foreign exchange market and markets in bullion and commodities.
The Stock Exchange
The origin of the London Stock Exchange goes back to the coffee houses of the seventeenth century where those who wished to invest or raise money bought and sold shares in joint stock companies. Brokers later opened their own subscription Economy of the country has been directed through the City which is the nerve center of the national finance. The greater part of the country’s income comes from invisible exports - operations originating from the City and flowing through its channels.
A large proportion of Britain’s wealth has been invested by the City overseas. A number of banking institutions have their head offices in Britain but operate mainly abroad in particular regions such as Latin America or East Asia through extensive branch networks. The major bank in this sector is Standard Chartered. This shows how the City of London expands its activities beyond the country’s borders; the same goes for the influence of the London Stock Exchange and Commodities Exchanges (particulars of the City of London as a financial center will be dealt with in Chapter three).
The City of London as a Financial Center, its Main Institutions.
There has been a long tradition in Britain of directing the economy through the great financial institutions together known as “the City”, which until 1997 were located in the “Square Mile” of the City of London. This remains broadly the case today, though the markets for financial and related services have grown and diversified greatly.
Banks, insurance companies, the Stock Exchange, money markets, commodity shipping and freight markets and other kinds of financial institutions are concentrated in the solemn buildings of the City and beyond its borders. The City of London is the largest financial center in Europe. London is also the world’s largest international insurance market and has the biggest foreign exchange market.
Britain’s financial service industry gives about 6.5 % of its gross domestic products (GDP) and contributes some 35 thousand million pounds a year. The largest contributors are banks, insurance, institutions pension funds, and securities dealers. To help Britain’s financial services to respond to the competition and at the same time to protect the public investment, the Government introduced 3 pieces of legislation to supervise financing the industry: the Financial Services Act (1986), the Building Societies Act (1986) and the Banking Act (1987). Under these acts investment businesses need to be authorized and they have to obey rules set in the legislation. The main responsibility to supervise were the Bank of England, the Building Societies Commission, the Treasury and the Department of Trade and Industry. The Serious Fraud office was set up to investigate and prosecute significant and complex fraud.
The Bank of England.
The Bank of England was established in 1684 by Act of Parliament and Royal Charter as a corporate body. Its entire capital stock was acquired by the Government under the Bank of England Act in 1946. It is the heart of the City of London and Britain’s central bank. The Bank’s main functions are to execute monetary policy, to act as banker to the Government, to issue banknote and to provide central Banking facilities
for the banking system that is the Bank is responsible for the financial system as a whole; it is “lender of last resort”.