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Key Points
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Key Concepts
US Securities clearing system
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wholesale and retail markets
A Prefunded Account is a collateralised trading account where the trading limit is equivalent to the amount of funds deposited into the account. It lets you enjoy lower online brokerage rates for SGX and other markets.
Prefunded Load
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for CME and DTCC , SEC has to approve
KEY TAKEAWAYS
- Cross margining is an offsetting process whereby excess margin in a trader's margin account is moved to another one of their margin accounts to satisfy maintenance margin requirements.
- The process allows a company or individual to use all of their available margin across all of their accounts.
- Cross margining increases a firm's or individual's liquidity and financing flexibility by reducing margin requirements and lowering net settlements.
- The unnecessary liquidation of positions and therefore potential losses is also avoided through cross margining.
- Cross margining services are calculated through clearing houses and clearing members, including prime brokerages that offer cross margining services to their clients.
- As a strong risk management tool, cross margining is particularly useful in volatile markets and for long-term trading strategies.
DeFi settlement example
creating escrow contracts with token assets for buyer and seller with DEX intermediaries
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- Buyer and Seller have accounts with a decentralized exchange ( DEX )
- Buyer and Seller have software or hardware wallets and applications to access their DEX platform
- the DEX platforms can access ALL related assets for sale on ALL DEX s to get the best prices ( not true in crypto now )
- the DEX platforms are backed by custodian banks with insurance on assets from bank failure ( not true in many cases now )
- the DEX trading fees are low ( not as low as CeFi - Classic Finance platforms now )
- the DEX purchase fees for purchases of products ( eg debit cards ) are low ( similar or higher than existing bank debit cards )
- the DEX withdrawal fees for withdrawal of fiat for crypto are zero ( no they are very high today )
- the DEX provides fully compliant KYC, AML and OFAC verifications on all account holders and asset transfers ( usually not true )
- the management of accounts, funds and trades at a DEX involves no security risks or identity theft risks ( not true )
process for escrow settlement of a trade
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"Private markets", on the other hand, deal with "venture capital" (VC) or "private equity" (PE) which is ownership in a company that is not publicly listed.
Like investing into a hot tech company like Google.
Main difference:
🧠 VC is likely an investment into EARLY stage company (think startups).
🧠 PE targets more MATURE companies that may be close to listing on a stock exchange or are large in size.
Particularly for PEs, these investments are not as easily accessed by the average investor because they are usually very large in size (tens if not hundreds of millions of US$) and not listed in public markets.
VCs/PEs may also lock your money up for multiple years.
Here's 5 stages from VC to PE investing and what they mean:
🚀 Angel (pre-VC): "Angel" investors give early stage support to startup level type companies when institutional investors are not ready to invest yet.
This involves a company which may have an 'idea' but has not properly validated it yet and built it into a business.
To raise funds these companies will ask friends or family to financial back them.
Investment size: US$10K - US$250K
🚀 Seed (VC): These companies have now at least have somewhat validated their product/service with customers or convincing research.
The money is typically used for product development and business expansion and this is when the first full time Sales & Marketing people get hired.
Investment size: US$250K - US$2M
🚀 Growth (VC/PE): At this stage companies more likely has figured out where their product/service has a need in the market but may still be unprofitable 💸
The fundraising is mainly for EXPANSION both for the team and their business...like pouring oil on a fire 🔥
Investment size: US$10M - US$50M
🚀 Crossover (PE): Investors at this stage are looking for companies that have SUSTAINABLE business models & profitability.
This funding may be used to expand into new international markets or develop multiple products/services.
Listing on a stock exchange (IPO) may not be far.
Investment size: US$50M - US$100M
🚀 Late stage/buyout (PE): Investors may be most focused on making these mature companies more efficient, marking up its value then 'flipping it' for a bigger multiple (return).
The company is very close to an EXIT either listing on a stock exchange (IPO) or getting "bought out".
Investment size: Depends but could be millions into billions.
What's your view on VCs and PEs?
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#markets #wealth #venturecapital #privateequity
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Potential Challenges
kpmg-regulations-addressing-top-of-mind-capital-markets-wealth-management-issues.pdf link
KPMG - top-mind-issues-capital-markets-wealth-management.html
kpmg-regulations-addressing-top-of-mind-capital-markets-wealth-management-issues.pdf file
Crypto and US Security Laws
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Through Daml, issuers and end investors gain better, timelier access to information and greater control and confidence in their securities processing. After a successful prototype, ASX announced that Daml-driven distributed ledger technology (DLT) would replace CHESS. Its ability to support the stable, orderly function of this high volume market was confirmed by third party security reviews
ASX has also recently launched Synfini, a “DLT as a Service” platform that allows customers to build their own enterprise DLT applications and solutions on the same VMware Blockchain and Daml technology that the ASX is using for its CHESS Replacement project.
The “DLT as a Service” solution includes three elements:
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