Price discovery and Equity: Difference between pages

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Price discovery is the process by which market participants obtain information about the prices at which counterparties are willing to buy  or sell specific financial instruments or other assets.
1. ''Financial reporting - balance sheet''.


For major transactions it is often facilitated by a professional adviser or intermediary.
Amounts in the balance sheet of a company representing the book value of the interests of the shareholders.


It includes share capital, cumulative retained profits (or losses), and other reserves.


:<span style="color:#4B0082">'''''Centralising FX price discovery'''''</span>
It is also known as 'total equity' or 'shareholders' funds'.


:"Let's say a corporate has gone through all the necessary steps... and now has a multibank panel at its disposal for FX execution.


:Each counterparty might have different trade processes and systems to navigate, and so the corporate might have to make an additional investment... in an aggregator platform to centralise price discovery..."
The book value of total equity is equal to the book value of the company's net assets (or net liabilities).
 
These two items in a balance sheet always balance - so long as there are no errors.
 
This is what is meant by a balance sheet "balancing".
 
 
2. ''Financial reporting''.
 
Comparable amounts for financial reporting entities that are not companies.
 
 
3. ''Capital investment.''
 
The capital of a firm invested by those accepting the greatest degree of risk, for example the holders of ordinary shares (also known as common stock or common equity) in a company.
 
 
4. ''Securities.''
 
Securities representing the rights of the risk capital investors in 3. above.
 
For example, ordinary shares, also known as common stock.
 
 
5. ''Banking and bank regulation''.
 
Abbreviation for common equity.
 
 
6. ''Net asset value.''
 
The net value of an asset, after deducting any debt relating to it or secured on it.
 
For example, the value of a residential property, after deducting the amount of a mortgage borrowing secured on it.
 
If the value of the borrowing exceeds the value of the asset, the situation can be described as 'negative equity'.
 
 
:<span style="color:#4B0082">'''''Example: Equity and Negative equity'''''</span>
 
:A house is worth EUR 400k.
 
:A borrowing of EUR 300k is secured by a mortgage over the house.
 
:The net worth is the difference between the value of the the house (asset) EUR 400k and the borrowing (liability) EUR 300k
 
:400k - 300k = EUR 100k
 
 
:The Equity in the house is the difference between the current value, and any loans secured over it.
:This is also EUR 100k.
 
 
:If the value of the house falls to EUR 250k, the borrowing now exceeds the value of the asset.
 
:This is 'negative equity' (of EUR 50k = 250k - 300k).
 
 
7. ''Law''.
 
A legal system that resolves disputes between persons by resort to principles of fairness and justness.
 
 
8. ''Ethics - governance''.
 
Fair treatment between different individuals and different groups.
 
 
:<span style="color:#4B0082">'''''Equity & inclusion are priority for investors'''''</span>
 
:“Diversity, equity and inclusion is emerging as a priority topic for investors, with some of the world’s largest asset managers reporting increased engagement with portfolio companies in this area."
 
:''FitchRatings - November 2021.''


:''Multibank FX platforms and fintech FX solutions - Eric Huttman, CEO of MillTechFX - The Treasurer online, October 2021''




== See also ==
== See also ==
*[[Aggregator]]
* [[An introduction to equity capital]]
*[[Broker-dealer]]
* [[Asset manager]]
*[[Capital allocation]]
* [[Assets]]
*[[Counterparty]]
* [[Balance]]
*[[Circuit breaker]]
* [[Balance sheet]]
*[[Electronic communication network]]
* [[Blue chip]]
*[[Execution]]
* [[Book equity]]
*[[Foreign exchange]]  (FX)
* [[Book value]]
*[[Initial Price Thoughts]] (IPT)
* [[Capital]]
*[[Investment bank]]
* [[Capital employed]]
*[[Price formation]]
* [[Capital structure]]
*[[Price talk]]
* [[Common equity]]
*[[Price transparency]]
* [[Common law]]
*[[Price whispers]]
* [[Common stock]]
*[[Tighten]]
* [[Compound instrument]]
*[[Transparency]]
* [[Cost of equity]]
*[[Widen]]
* [[Debt]]
* [[Debt for equity swap]]
* [[Debt to equity ratio]]
* [[Diversity]]
* [[Dividend]]
* [[Dividend growth model]]
* [[Entity]]
* [[Equality]]
*[[Equitable]]
* [[Equity accounting]]
* [[Equity beta]]
* [[Equity capital]]
* [[Equity cost of capital]]
* [[Equity instrument]]
* [[Equity investments]]
* [[Equity market]]
* [[Equity method]]
* [[Equity risk]]
* [[Equity risk premium]]  (ERP)
* [[Equity structured deposit]]
* [[Equity swap]]
* [[Financial markets]]
* [[Fitch]]
* [[General equity risk]]
* [[Green equity]]
* [[Hybrid capital]]
* [[Inclusion]]
* [[Kay Review]]
* [[Liabilities]]
* [[Liabilities and equity]]
* [[Market/book ratio]]
* [[Member]]
* [[Mezzanine]]
* [[Mortgage]]
* [[Negative equity]]
* [[Net assets]]
* [[Net worth]]
* [[NOSH]]
* [[Ordinary shares]]
* [[Own funds]]
* [[Private equity]]
* [[Quasi-equity]]
* [[Reporting entity]]
* [[Reserves]]
* [[Return on equity]]
* [[Risk]]
* [[Share]]
* [[Share capital]]
* [[Shareholder]]
* [[Shareholder value]]
* [[Shareholders’ funds]]
* [[Shareholders’ wealth]]
* [[Stakeholder]]
* [[Statement of changes in equity]]
* [[Statement of shareholders' equity]]
* [[Stock]]
* [[Total Loss Absorbing Capacity]]
* [[Total return swap]]


[[Category:Financial_products_and_markets]]
[[Category:Compliance_and_audit]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]

Latest revision as of 05:12, 29 March 2024

1. Financial reporting - balance sheet.

Amounts in the balance sheet of a company representing the book value of the interests of the shareholders.

It includes share capital, cumulative retained profits (or losses), and other reserves.

It is also known as 'total equity' or 'shareholders' funds'.


The book value of total equity is equal to the book value of the company's net assets (or net liabilities).

These two items in a balance sheet always balance - so long as there are no errors.

This is what is meant by a balance sheet "balancing".


2. Financial reporting.

Comparable amounts for financial reporting entities that are not companies.


3. Capital investment.

The capital of a firm invested by those accepting the greatest degree of risk, for example the holders of ordinary shares (also known as common stock or common equity) in a company.


4. Securities.

Securities representing the rights of the risk capital investors in 3. above.

For example, ordinary shares, also known as common stock.


5. Banking and bank regulation.

Abbreviation for common equity.


6. Net asset value.

The net value of an asset, after deducting any debt relating to it or secured on it.

For example, the value of a residential property, after deducting the amount of a mortgage borrowing secured on it.

If the value of the borrowing exceeds the value of the asset, the situation can be described as 'negative equity'.


Example: Equity and Negative equity
A house is worth EUR 400k.
A borrowing of EUR 300k is secured by a mortgage over the house.
The net worth is the difference between the value of the the house (asset) EUR 400k and the borrowing (liability) EUR 300k
400k - 300k = EUR 100k


The Equity in the house is the difference between the current value, and any loans secured over it.
This is also EUR 100k.


If the value of the house falls to EUR 250k, the borrowing now exceeds the value of the asset.
This is 'negative equity' (of EUR 50k = 250k - 300k).


7. Law.

A legal system that resolves disputes between persons by resort to principles of fairness and justness.


8. Ethics - governance.

Fair treatment between different individuals and different groups.


Equity & inclusion are priority for investors
“Diversity, equity and inclusion is emerging as a priority topic for investors, with some of the world’s largest asset managers reporting increased engagement with portfolio companies in this area."
FitchRatings - November 2021.


See also

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