2. Write down 3-5 questions about the text.

3. Describe the components of the global financial markets. Global Financial Markets

The global market for finance encompasses a complex web of financial instruments and institutions. Its structure and functioning are affected in fundamental ways ... the macroeconomic environment (in particular, patterns of interest rates and exchange rates), the regulatory and technological environment, and fundamentals driving the real sector of the international economy.

The cash and derivative instruments that comprise global financial markets rest ... four cornerstones: 1) foreign exchange market, 2) the Eurocurrency market, 3) the market of intermediated credit facilities and debt instruments and 4) the equities market.

Foreign exchange (Forex) market stands ... the core of the global financial market. It encompasses spot as well as forward interbank and customer transactions, as well as Forex futures and options traded ... various organized exchanges around the world.

Motivations for Forex transactions range ... short-term positioning (speculation) to hedging ... commercial or investment transactions via outright forwards, forex swaps, futures or options.

Forex Market is a structure upon which most other segments… the global financial markets are built.

A second cornerstone is the Eurocurrency Market. Eurocurrency financial items are claims that are created in one country but denominated ... the currency of another. The Eurocurrency system comprises the markets within which these claims are created and traded. This activity originated ... Europe but now takes place ... the world. Three broad classes of financial items are involved:

1. bank deposits and credits, for example, dollar deposits held … European banks;

2. primary securities in the form of Eurobonds and Euronotes; and

3. derivative securities such as foreign currency options or futures on Eurodollar instruments.

Initially, Eurocurrency financial items were denominated primarily ... dollars. Today, there are many currencies of denomination, with the Deutchemark and Yen playing an increasingly important role. As in the foreign exchange market, the core of this market consists ... major dealing banks that consistently quote bid and offered prices in active interbank trading. The Bank of England samples these interest rates daily for a group of reference banks and publishes an average of the two sides of the market as the London interbank bid (LIBID) and offered (LIBOR) rates. LIBOR has become the most important floating-rate pricing benchmark for loans and debt instruments ... the global financial markets.

International lending and issuance of debt securities represents the third major segment of the global financial market.

Perhaps the most long-standing form of international lending involves trade financing, whereby a foreign buyer agrees to pay … imported merchandise after a period of time.

A corporation or government requiring general international bank financing can borrow ... foreign-based financial intermediaries under a variety of structures ranging from revolving credit facilities, term loans and project financing, to various kinds of secured credits.

An alternative ... bank financing available ... many corporate and governmental borrowers is to issue debt securities (like commercial paper or government bills).

The fourth cornerstone of the global financial market involves equities, that is, common and preferred shares. Corporations seeking to raise equity capital may issue shares in the domestic market through the underwriting channels and simultaneously distribute them ... foreign investors.

Words you may need:

Англiйский варiант	Росiйський варiант	Український варiант
web	паутина	павутина
regulatory environment	правовое поле	правове поле
fundamentals	основы	основи
drive	приводить в движение	приводити в рух
derivative instruments	производные инструменты	похідні інструменти
Eurocurrency market	евровалютный рынок	євровалютний ринок
credit facilities	кредиты, источники кредитования	кредити, джерела кредитування
core	сердцевина, ядро	серцевина, ядро
positioning	установление позиции	встановлення позиції
hedging	хеджирование	хеджування
claim	требование	вимога
primary securities	первичные ценные бумаги	первинні цінні папери
Euronote	евронота (1-6-месячный вексель)	євронота (1-6-місячний вексель)
sample	отбирать {образцы)	відбирати {зразки)
reference banks	банки, чьи процентные ставки используются при расчете ЛИБОР и др. ставок-ориентиров	банки, чиї відсоткові ставки використовуються при розрахунку ЛІБОР і ін. ставок-орієнтирів
London interbank bid rate (LIBID)	ставка покупателя на лондонском межбанков­ском рынке депозитов (ЛИБИД)	ставка покупця на лондонському міжбанківському ринку депозитів (ЛІБІД)
London interbank offered rate (LIBOR)	ставка продавца (предложения) на лондон­ском межбанковском рынке депозитов (ЛИБОР)	ставка продавця (пропозиції) на лондонському міжбанківському ринку депозитів (ЛІБОР)
debt security	ценная бумага, представляющая собой долговое свидетельство	цінний папір, що є борговим свідоцтвом
long-standing	давнишний, давний	давнішній, давній
trade financing	финансирование торговли	фінансування торгівлі
merchandise	товары	товари
foreign-based	расположенный за рубежом	що розташований за рубежем
revolving credit facilities	револьверный кредит	револьверний кредит
term loan	срочная ссуда	термінова позика
project financing	финансирование проектов	фінансування проектів
secured credit	ломбардный кредит (кредит под обеспечение легко реализуемыми ценными бумагами)	ломбардний кредит (кредит під забезпечення, що легко реалізовується цінними паперами)
commercial paper	«коммерческие бумаги», векселя	«комерційні папери», векселі

Ex. 8.

a) Open the brackets putting the verbs in the correct form.

b) Explain what are hedging techniques mentioned in the text.